^^^•^-5 







SPEECHES AND REPORTS 



ASSEMBLY OF NEW-YORK. 



ANNUAL SESSION OF 1838 



By DANIEL D. BARNARD. 



v^ 



^^« 






ALBANY : 

PUBLISHED BY OLIVER STEELE 

405 SOUTH ilARKET-STREET. 

1838, 



flls 



[Entered according to Act of Congress, in the year one thousand 
eight hundred and thirty-eight, by Oliver Steele, in the Clerk's 
Office of the Northern District Court of New- York.] 



Packard, Vati Benthiivstn &. Co., Printers. 



CONTENTS 



Page 

Speech on the Bill to repeal the Law prohibiting the cir- 
culation of small bank-notes — Jan. 9, 1838, 1 

Report on the subject of Religious Exercises, and the use 

of the Bible, in Schools— Jan. 23, 1838, 49 

Speech on Corporations, and the Proposition to make Cor- 
porators personally liable — Jan. 30, 1838, €5 

Speech on the Resolutions of Mr, HoUey, respecting the 

Sub-Treasury Scheme— Feb. 14, 1838, 81 

Report on the Subject and System of Public Instruction — 

March 7, 1838, 109 

Remarks on the Economical Policy of Internal Improve- 
ments—March 13, 1838, 137 

Speech on Banking, Currency, and Credit, delivered upon 
the passage of the General Banking Law — March 29, 
1838, 143 

APPENDIX— General Banking Law, 215 



INTRODUCTION 



The Legislature of the State of New- York, elected 
in the fall of 1837, convened at Albany, in January, 
1838, under circumstances of no common interest. 
The opinion of the people, as expressed through the 
ballot box, was shown to be in decided disapproval of 
the course and policy avowed by the Administration of 
the National Government. This was evinced by the 
election of a large majority of members of the Assem- 
bly, and three-fourths of the candidates for the Senate, 
from the party opposed to the declared policy of the go- 
vernment. As the executive officers of the State were 
intimately hnked in, and connected, as partizan appro- 
vers, with the opinions of the national cabinet, the po- 
pular election referred to, may, with equal fairness, be 
deemed a rebuke of them, in common with their coad- 
jutors at Washington city. In this state of things, the 
assemblage of a Legislature composed of a majority in 



VI INTRODUCTION. 

opposition, on joint ballot, to the State and General Go- 
vernments, commanded the public attention in no or- 
dinary degree. The more particularly, as the topics 
which would naturally be presented for their delibera- 
tion were of unusual weight and importance. 

The suspension of specie payments by the banks of 
this State — no matter by whom caused, or by whom 
sanctioned — inflicted an almost intolerable inconve- 
nience upon the people, from the consequent scarcity of 
silver coin. As the laws prohibited the emission of 
small notes by our State banks, the people were of neces- 
sity subjected to an influx of depreciated paper money 
from foreign States, which circulated from hand to hand 
by common consent, in despite of the ineffectual laws 
which had been enacted to restrain them. This state 
of things forced the general conviction upon the public 
mind, that it was the wisest policy to return to our an- 
cient system, and allow our banks to furnish a better 
small-note currency, than that which then filled the 
lower channels of business. Upon this conviction the 
Legislature acted, and their measures were followed by 
the general rehef, from a depreciated currency of which 
the people, in the main, knew nothing, and the neces- 
sity of practically proclaiming the law which prohibited 
it, to be a dead letter. 

At an early period of the session a memorial of a 
most unexpected and extraordinary character was pre- 



INTRODUCTION. VU 

sented to the A.ssembly. It prayed neither more nor 
less, than that the Legislature would enact a law to pro- 
hibit the practice of praying, singing, reading the Bible, 
and other religious exercises in such schools, academies, 
and seminaries of education, as receive aid from the 
public treasury. This subject, of so much importance to 
the substantial welfare of the youth of the State, and the 
perpetuity of its institutions, was referred to the Commit- 
tee on Colleges, Academies and Common Schools. The 
report of that Committee, confining its views, with great 
strictness, to the question in a solely political light, de- 
monstrated with much delicacy and forbearance, and 
yet with sufiicient strength, the fallacy of that theory 
which forebodes an infringement of republican liberty 
as inseparable from a general reading of the Holy Scrip- 
tures. The action of the Assembly, subsequent to the 
production of this Report, was all but unanimous, in 
adopting the recommendation of the Committee, viz: 
" that the prayer of the memorialists be not granted." 
It is sufficient for the merit of this Report, to say that it 
has not only been received with commendation in this 
State, but it has commanded for itself an extensive cir- 
culation and reprint in other States. 

The introduction to the Assembly of a Bill to incor- 
porate the Cold Spring Whaling Company, though in 
itself of limited public interest, became of importance in 
consequence of the discussion which it drew out,, bear- 



Vlll INTRODUCTION. 

ing upon great abstract questions. Among them was 
one as to the propriety of subjecting Corporators to per- 
sonal responsibility for the debts of corporations. The 
negative ground is strongly taken in a speech contained 
in the present volume, which, as an exposition of an 
important principle, it has been deemed expedient to re- 
tain in a more enduring shape than the columns of a 
newspaper. 

When the Executive of the United States summoned 
Congress to an extra session, in September, 1837, he 
promulgated to them, in his special message, an entire 
new theory as to the future management of the public 
money, and the reciprocal duties between the govern- 
ment and the people. He proposed an entire abandon- 
ment of what, up to his time, had been considered an 
essential power and duty of the government, enjoined 
by the constitution, and suggested instead, a system of 
individual receivers and custodians of the public mo- 
neys, subject generally to the supervision and control of 
the President. This, which soon became known as 
" The Suh-Treasiiry tScheme,'^ was received with sig- 
nal disfavor by the people at large, of both parties. So 
unconstitutional was its character and fallacious its logic 
considered in this State, that resolutions were introduced 
into the House of Assembly, condemnatory of its princi- 
ples and policy. The introduction of these resolutions 
called out the able and searching examination of this 



INTRODUCTION. IX 

leading executive measure, which will be found in the 
succeeding pages. 

In addition to the report on the memorial against the 
use of Bibles, the Committee on Colleges, &;c. made a re- 
port to the House on that part of the Governor's mes- 
sage which relates to Public Instruction. This report 
enforced upon the Legislature, with much clearness of 
logic and strength of eloquence, the duty, eminent and 
obligatory, of providing for the education of the poor — 
of enlarging the field of intellectual action — and of se- 
curing to the young the means of cultivating the nobler 
powers and the purer virtues. It was received with the 
due appreciation to which it was entitled, both in and 
out of the House. 

Upon the important subject of Internal Improvements 
the House had the good fortune to be highly gratified, 
and it may be added instructed, by a most luminous 
and comprehensive Report, from the pen of Mr. Ruggles 
of New- York, chairman of the Committee on that subject. 
Of the superior abihty, thought, and forecast of this Re- 
port it is not necessary here to speak. The people have 
pronounced upon it in a language not to be misunderstood. 
Some remarks connected with the subject are contained 
in the succeeding volume, which present some important 
principles, worthy of the consideration of the reader. 

The growing distrust, throughout the country, of the 
existing system of bank charters, attributable, in the 



X INTRODUCTION. 

main, to the destructive efforts directed against one in- 
stitution by a late public functionary, was increased to 
a high degree by the general derangement affecting all 
classes of industry, consequent upon the suspension of 
specie payments. There was obviously a determination 
in the pubhc mind to interpose some remedial legisla- 
tion, between the action of bank corporations, and the 
people at large. It was contended, that as these insti- 
tutions were only willing to lend freely when money 
was plenty and people did not want it, and were obdu- 
rate in refusing when it was scarce, and their refusal 
produced an added pressure, that their real utihty wa^ 
much lessened, and that their privileges were in fact mo- 
nopolies, the benefits of which, at seasons of calamity, 
enured only to the few. The mode of relief proposed 
was by a repeal of the restraining law, and enacting a 
General Banking Law, allowing the privilege of bank- 
ing to all^ under certain restrictions. This discussion 
called up the whole subject of banking, and the true 
principles involved therein. The speech at the close of 
the volume discusses and examines these in detail, and 
enforces upon the attention of the reader some cardinal 
principles, which are not always reverted to, even by re- 
puted statesmen of experience, when legislating upon 
this intricate and important subject. 

The speeches and reports of this volume are from the 
pen of D. D. Barnard, now member of the Assembly 



INTRODUCTION. XI 

from the eity of Albany. It but remains for the Editor 
to say, that they were collected by him, and put forth by 
him, at the instance of friends, who, in common with 
himself, appreciated the sentiments advanced, and the 
principles maintained by Mr. Barnard during the win- 
ter of 1838. They esteemed these sentiments and 
principles as possessing too much of permanent interest 
to be lost, (in some sense,) in the ephemeral columns of 
the daily press. It was resolved, with the author's con- 
sent, to combine them in their present more enduring 
shape, and the newspapers in which they had appeared 
were accordingly gathered, and placed in the hands of 
the book compositor. The result is before the public ; 
and if passages of the volume do not often charm the 
desultory reader by their eloquence, or instruct by their 
inculcation of sound principles, the book will still be 
valuable as a book of reference for the important topics 
discussed in the New- York Legislature of 1838. 

J. B. Y. S. 
Albany- June, 1838. 



SPEECH 

OH THE BILL TO REPEAL THE LAW PROHIBITING THK 
CIRCULATION OF SMALL BANK NOTES.; DELIVERED IN 
THE ASSEMBLY OF NEW-YORK, JAN. 9, 1838. 

Mr. Chairman — The bill before us involves some 
principles which I regard as of considerable importance, 
and in relation to which I desire personally to be under- 
stood. I shall J therefore, with the indulgence of the 
committee, undertake to present my views of the real 
merits of the measure under debate. 

And if the true merits of the bill only had been brought 
under review and discussion, my remarks would be con- 
fined strictly to those merits; but the debate has taken 
a wider range under the lead of gentlemen who have 
thought it to be their duty to oppose the bill; and I may 
deem it necessary, before I close, as other gentlemen 
have done, to notice, I hope not at much length, the po- 
sition in which the opponents of this measure have 
chosen to place themselves before the committee, and be- 
fore the pubhc. 

Before proceeding, however, with the discussion, ac- 
cording to the views now indicated, I beg leave to offer 
a general remark or two, not inappropriate I hope, at 
this early stage of the session, 

1 



2 

On this, and on all subjects of any considerable im- 
portance, coming before us for action, I am in favor of 
discussion. The truth was never injured any where by 
full and free discussion. It is the way, and the only 
way, in which truth is shown to be mighty, and in 
which it comes eventually always to prevail. This is the 
only way in which error can be successfully assailed and 
beaten down. Falsehood is generally as good as fact — 
naked theory as good as a philosophical induction — and 
a mere sophism as forcible as a sound argument — until 
the right is presented and the wrong exposed. But 1 
am in favor of legislative discussion, sir, above discus- 
sion in almost every other mode. I think its value is 
not generally understood. Even favorite and popular 
measures, concerning which there is apt to be so much 
impatient demand for action, are none the worse for being 
thoroughly discussed. If this course were taken more 
generally than it is, I am satisfied that legislation in re- 
publican governments would be less liable than it now 
is to the charge of capriciousness, and want of steadiness 
and consistency. It is in the nature of things, that 
large communities of men should act, more or less, from 
impulse ; but it is the duty of legislative bodies to act as 
little from impulse, and as much from principle and rea- 
son, as possible. One way of securing this advantage 
is, to deliberate, and to discuss. 

The very measure before us, in its history, is, to some 
extent, an apt illustration of the manner in which a 
community may at different periods, be swayed, first 
forward, and then backward, on the same subject. It is 
useless to deny, that no longer than three years ago, 
there was a current of popular sentiment in this state, 



setting in favor of the suppression of small bank bills, 
though, because as I think that sentiment was wrong, it 
was by no means as strong as it was made to appear to 
be, and not half as strong as that which now demands the 
repeal of the law. As a legislative measure, that law 
was not carried by the votes of any party. Men of all 
parties, not all men of all parties, but men of all parties 
aided in its passage — many of whom, in common with 
those whom they represented, have now become satis- 
fied that the measure was erroneous, and desire to see it 
changed. 

I mention this fact only to show the tendency of 
things with us, and to derive from it, as I think b}^ a 
just inference, the importance of ample deliberation and 
discussion on all questions coming up for legislative ac- 
tion, in regard to the policy of which doubts may rea- 
sonably be entertained. 

I profess to entertain great confidence in the opinions 
of the people as quite likely to be right, provided only a 
fair opportunity be afforded them to form and mature 
their judgments. And at the same time, I recognize the 
possibility of their being quite wrong, even though quite 
unanimous, when led by demagogues, and acting only 
from impulse, or from passion. I hold it to be the im- 
perious duty of every member on this floor, who feels 
himself capable of doing so, to aid, to the extent of his 
powers, in the development and elucidation of all sub- 
jects of general importance presented before us. In this 
way we may add energy to our own powers of thought 
and comprehension ; we may enlighten each other, and 
we may aid most materially, through the public audi- 
ences with which we are favored, and through the re- 



ports that are made of us, in giving a just direction to 
public sentiment. In this way, if fortunate and faithful, 
we may be continually opening new fountains of hght 
on subjects of pubHc interest, and digging deeper and 
deeper the wells of clear and unadulterated truth. 

It is evident, however, that to secure the best benefits 
of discussion, it should be thorough and full. We shall 
do httle towards fathoming the deep waters that may 
chance to lie beneath us, if we arc content with sporting 
ourselves on the frozen surface of subjects only. Yf e 
must take care to examine each others positions here, 
each others opinions, doctrines and arguments, and we 
must be faithful to expose them where we believe them 
to be wrong, and where they tend, as we think, to mis- 
chief. This, I give gentlemen fair notice, shall be my 
course, pursuing it I trust with perfect courtesy, and 
the kindest regard for the persons and feelings of those, 
of whatever political faith, with whom I have the 
gratification to be associated on this floor, and never in- 
dulging in crimination or severity, but when the case 
shall seem imperatively to demand it; and while I thus 
avow my own course towards others, I invite others to 
do by me in this regard, as I declare it to be my pur- 
pose to do by them. 

We have before us, Mr. Chairman, a bill, the object of 
which to restore to this community a bank-note curren- 
cy, to be furnished by our own banks, of convenient de- 
nominations for the common and smaller business trans- 
actions of life. A brief history of past legislative action 
on this subject will not be out of place. In 1830 a law 
was passed, prohibiting the circulation in this state of 
the notes of banks out of the state, of a denomination 



less than five dollars. This law was wholly ineffectual. 
It was scarcely noticed, much less obeyed. The object 
was, I suppose, two fold ; it was to get rid of a circula- 
tion which was too far from the place of redemption to 
be entirely sound, which was often spurious and gene- 
rally suspected ; and to clear the channels which that cir- 
culation occupied, in order that they might be filled with 
the better-known and healthier issues of our ovrn banks. 
The law was, however, as I have said, without effect. 

In 1835, a policy, entirely new I think in this state, 
was proposed. It was an experiment on the currency, 
though one which certainly found more favor with the 
public generally than some other experiments on the 
same subject. A law was passed designed to enforce 
obedience to the provisions of the act of 1830 in regard 
to foreign bank notes, and at the same time forbidding 
the issue and circulation of domestic notes of a similar 
description. This law was effective , and we ceased to 
have a general bank-note currency in this state, except 
of denominations of five dollars and upwards. This oc- 
curred, by the provisions of the act, in the fall of 1836. 
The operation of the law, according to my observation, 
was never, from the first, deemed to be either convenient 
or beneficial by any class in the community. Undoubt- 
edly, there were individuals in every class with whom 
the measure was a favorite one. 

The law of 1835 had been in effective operation per- 
haps a little more than six months, when the unhappy 
suspension of specie payments by the banks took place. 
This event, of course, changed the aspect of things en- 
tirely, and what might have been a good currency mea- 
sure before that occurrence, was not unlikely to prove a 

r 



6 

disastrous one after it. The legislature of this state was 
in session when that event happened ; and while it re- 
cognized by law, with great unanimity, the necessities 
which had driven the banks to suspension, it refused, in 
its wisdom, to entertain a proposition for the restoration 
of a small bank-note currency to be issued by the banks 
of this state. The consequence of this refusal was just 
what should have been, and was expected. The state 
has been flooded with the small paper issues of banks in 
other states, forming, in fact, the only currency of that 
description in use amongst us; a currency of a conside- 
rable part of which even the genuineness is justly doubt- 
ed, much of which is discredited for soundness, and all 
of which is, at this time, greatly depreciated as compared 
with our own bank paper. 

It is now proposed, by the bill before us, to return 
again in this state, unconditionally, to the use of a small- 
note currency to be furnished by our own banks; and 
from the brief recital now made, it will be seen that 
this measure presents itself to us in two aspects. In one, 
we may regard it as a measure of temporary relief, de- 
signed to afford a remedy for a temporary and pressing 
evil; in the other aspect, it involves the serious and im- 
portant question, whether it be the true policy of this 
state, as a settled and permanent measure, to supply to 
the community a bank-note currency, rather than an 
exclusive specie currency, for business requiring money 
of a denomination over one and under five dollars? I 
am in favor of the bill on both grounds ; as a measure 
of temporay rehef, and also as a measure of sound poli- 
cy for all time to come. 

Considered as a measure of immediate relief, I hold 



it to be the imperative duty of the legislature to pass the 
bill, and to pass it as promptly as is at all consistent with 
due deliberation. Sir, what was the condition of things 
in this state in regard to the currency, when the banks 
had suspended specie payments ? x\nd what was the 
duty of the legislature, then in session, on the subject ? 
Why, sir, this community presented the extraordinary 
spectacle of a people actually without a legal currency, 
of any description, for all its business requiring money 
under five dollars. The instant the suspension occurred, 
the metals ceased to circulate. They ceased to be the 
practical measure of value, and by necessity they ceased 
to be capable of use as the common medium of exchange. 
They bore at once a heavy premium, as compared with 
that which alone filled the channels of circulation as 
money ; and they became an article of trade. When 
the banks suspended payments in specie, the necessary 
effect was, as it always has been and always will be in 
like cases, that the whole community followed the ex- 
ample, and suspended payments in specie likewise. In 
such cases, foreign commercial balances may still be paid 
in specie ; but domestic commercial balances generally, 
and nearly all the ordinary payments and exchanges 
are made not only without specie, but without any more 
regard to it than if it had been still in the mines. With 
the suspension in May last, specie ceased to be money, 
because it ceased to possess the peculiar attributes which 
alone fit it for the uses of money. It was still nominally 
the legal currency of the whole country, but the common 
use of it as such, either in making present exchanges, 
or in the performance of contracts, was at once suspend- 
ed by universal consent, except only in cases where legal 



8 

coercion was resorted to ; and to this the banks were liable 
as well as individuals. 

Now with specie withdrawn from circulation, what 
was the community to do, without legislative aid ? By 
the laws of trade, metal had ceased to be money, and 
by our own statute law, applicable to small bills, the use 
of a paper substitute was so far forbidden. Our own 
banks could not furnish it under pain of a forfeiture of 
their charters, and to offer in payment a small note of 
a foreign bank subjected the offender to a heavy fine. 
And that, at such a time, with such a condition of things 
and such a state of the law, a legislature should have 
actually been in session, a legislature claiming to repre- 
sent an intelligent community, nay, claiming itself to be 
both intelligent and honest, and yet that that legislature, 
with the whole subject before it and pressed on its atten- 
tion, should have utterly refused any action whatever 
upon it — all this I confess almost passes belief Sir, con- 
ceive of a people numbering two millions — an industri- 
ous people — an enterprising people — a trading people — 
literally without an authorized currency for the daily and 
common transactions of hfe ! And such was this peo- 
ple — specie withdrawn, and paper refused, and nothing 
remaining but to come down to a condition of barter, in 
obedience to law, or to defy the government, and seize a 
currency of some sort, or of any sort, wherever it was 
to be found. 

Sir, as money is a primary want of a civilized com- 
munity, so 1 hold it to be the first duty of government 
to see that that want is supphed. Since the period 
of the first introduction of the precious metals for gene- 
ral use as money, it does not occur to me, that any gc- 



vernment, in any part of the civilized and trading world, 
has thought it could safely leave the subject of its cur- 
rency to take care of itself; much less has any such go- 
vernment ever ventured so to decree or legislate, as that 
a whole people should be effectually denied the use of a 
currency, whether for larger or smaller transactions, un- 
less in defiance of a highly penal enactment. It is, in 
this enlightened age, and in this enlightened and happy 
country, that the first example of the sort has been set. 
And I charge it on the last legislature of this state, 
and on that party in the state, w^hose will it came 
here to perform ; that 1 can recall to mind no parallel 
for that gross neglect of the performance of legislative 
obligation of which that body was guilty, wljen it re- 
fused, after the suspension of specie payments, and its 
own sanction of that measure as unavoidable, to pro- 
vide for the people of this state a currency of small bank 
bills. I charge it on the administration then in full 
power, that it was guilty of a gross dereliction of duty 
in this matter, equally without precedent and without 
excuse. That administration deliberately refused to sup- 
ply to this community a currency of denominations be- 
low five dollars, and at the same time forbid the free 
citizens of this state, under severe penalties, to supply 
themselves with such a currency, exhibiting at once a 
mingled folly and recklessness which it is difficult to con- 
template without indignation. 

Sir, such was not the conduct of that sagacious states- 
man, Mr. Pitt, on a like occasion, notwithstanding the 
prophetic warning given him by Mr. Burke, to which 
allusion has been made in the course of this debate. 
Mn Burke, then, I think, at Bath, and laboring under 



10 

his last illness, and evidently looking at the subject, as 
certainly was not his manner when he was in the vigor 
of his age, in a single point of view, desired his corres- 
pondent to tell the minister from him, that if he allowed 
the Bank of England to issue one pound notes he would 
never see a guinea again. The law of currency, to 
which that remarkable man referred, was as certain in 
its operation as the fact was then unimportant; and the 
advice was disregarded by Mr. Pitt, as it should have 
been. For thirty years previous to this time the bank 
had been permitted to issue no notes of a denomination 
less than five pounds. But the condition of things was 
now changed. After a struggle, which had lasted for 
several years, the government determined that the bank 
ought to yield, and it was directed to refuse payments in 
specie. This was in 1797 ; but the government did not, 
by an arbitrary decree, leave the country without a cur- 
rency of small money. The bank was authorized to 
issue small notes, and although it resumed in 1821, yet 
it was not, I believe, till 1829, that all notes under £5 
ceased to circulate. 

And now, Mr. Chairman, if it was the duty of the 
legislature in session when the suspension in this coun- 
try occurred last spring, to have promptly provided for a 
due supply of small notes for circulation from our own 
banks, is it any the less the duty of the legislature to 
do, at this time, what ought by all means to have been 
then done ? It is true, the remedy comes late, but its 
necessity is scarcely less imperative than it was at the 
moment of suspension. That suspension still continues, 
and is legalized yet for four months to come. So long 
as the suspension shall continue, so long will specie bear 



11 

a premium. And though that premium is greatly les- 
sened, yet it is still enough, and will continue to be 
enough, effectually to forbid its use as a common medi- 
um of exchange. In the mean time, the law prohibit- 
ing the issue of small notes by our own banks, and the 
circulation of such notes from any banks, keeps its place 
in the statute book : and it is just as true now as it was 
when the suspension began, that this great community 
is wholly without a currency of small money provided 
by law ; and not only so, that it is utterly forbidden, by 
positive and penal enactment, to supply itself v/ith the 
only currency of the sort possible to be brought into use. 

The occasion for the interposition of the legislature 
still remains, and in my judgment, we shall be wanting 
in the discharge of our public duty, if we fail to grant to 
the community the proper relief This duty on our 
part, is made the more indispensable from the unhappy 
position which the people have been compelled to occupy 
towards the law, and the public authorities of the state. 
They stand in an attitude of open and avowed resis- 
tance to authority; a state of things at war with both 
law and morals, and tending to the destruction of all 
that is stable, and all that is valuable in civil society. 

The policy to which I have referred, and which re- 
fused to unlock our own banks for the needed supply of 
small bills, led of course to the immediate introduction of 
foreign notes. This borrowed currency was brought in 
at a premium, and if it ever goes out, it must go out at 
a discount. We have paid for importing it, we pay, as 
we should, for the use of it, and we must finally pay for 
sending it home. It is believed that there may be at 
this time not less than three millions of this paper afloat 



12 

in this state. It is here for use at a great and constantly 
increasing expense, and what is worse, it is here in defi- 
ance of all legal authority. Much of it is without doubt 
spurious ; some of it the issues of banks of doubtful cre- 
dit ; and all of it at a heavy discount, not merely as com- 
pared with specie, but as compared with our own bank 
paper. I regard it as an indispensable obligation resting 
on us, to do what lies in our power, at least to put the 
community in possession of something which can be le- 
gally used as a currency ; and thus by frankly confess- 
ing the enormous errors of past legislation, under which 
the citizen was driven into hostility to the law, open 
the way for restoring to him his rights, and at the same 
time bringing him back to a condition of obedience to 
public authority. It was one of the w^orst acts of ty- 
ranny, to force the community into the use of this fo- 
reign paper, and it is only an act of sheer justice, with 
our earliest oppportunity, to reheve the public of the ne- 
cessity of continuing to employ it. 

It is mainly on the ground which I have now ex- 
plained, that I choose to rest my opinion of the impor- 
tance of passing this bill, as a measure of temporary re- 
lief. There are, however, some other very important 
considerations which ought to have great weight with 
us. One of these, and the only one to which I can now 
refer, is the valuable aid which the issuing of small bills 
will give the banks, towards bringing about a speedy 
and safe resumption of specie payments. It is easy 
enough to see the operation of the measure in this re- 
spect, and hardly needs, or would justify, any elaborate 
explanation. That such would be its effect, seems to be 
undisputed in every quarter, and an argument, there- 



13 

fore, to justify such an expectation from it, might well 
be regarded as out of place at the present time. 

It will be observed, that the bill makes no attempt to 
limit the amount of issues, which the banks may make 
of small notes. The sum of their issues is already re- 
strained by law, and beyond that limit they will of 
course be unable to go. Whether they shall take the 
occasion of the permissive authority of this bill to come 
up to that limit, or in any the least degree to increase 
the present sum of their issues, so long as the suspension 
lasts, must depend upon themselves. I am disposed to 
trust them, and leave them to act upon their own respon- 
sibilities. I do not beheve that, in the present condition 
of things, they will increase their issues materially by 
reason of this bill. Their policy has been, and is, a set- 
tled one. They have been, and are, steadily strength- 
ening themselves for the period of resumption. This 
they do by curtailment ; and severe as the operation 
is on the community, I think their safety consists in a 
a firm adherence to this line of policy — especially if they 
are to be left, as present appearances seem to indicate, 
and as I think will be their duty, if that course is forced 
upon them, to return to specie payments without the 
consent or co-operation of their neighbors. I hope, and 
I believe, that our banks will resume within the period 
of indulgence now allowed by law. Every thing so far 
has show^n a settled determination on their part not to 
protract the time -the disposition is not wanting — I be- 
lieve they will have the ability — and in addition to all 
this, there is a force pressing on them from the commu- 
nity, and of which there is evidence enough in all quar- 
ters of this representative body, which they cannot but 



14 

know it would be mere madness in them to encounter 
or resist, even if they had the disposition to do so. On 
the whole, therefore, I agree with the gentleman who 
has introduced this bill, that the simplest form in which 
the authority to issue small bills, can be restored to the 
banks, is the best form. As a general practice, while 
the suspension lasts, they will put out small bills only 
when they can make them take the place of their own 
bills of larger denominations now in circulation ; and if 
this prudent course be at all departed from, we may, I 
think, safely calculate, that it will be only on the part of 
those banks which, from the secure footing on which 
they have already placed themselves, look forward to 
the conflict which the act of resumption is nearly cer- 
tain to bring upon them, with calmness and with confi- 
dence. 

But, sir, this bill would by no means satisfy me if it 
did not look to a return to the former policy of this state, 
in regard to a small bank-note currency as a perma- 
nent and established measure. For one, I was never 
satisfied with the change, and I have never from the first 
moment of its introduction, seen any evidence to con- 
vince me that the community at large was satisfied with 
it. Quite the contrary. It has at all times been pro- 
ductive of great inconvenience ; it has greatly impeded 
instead of facilitating business ; and it has unhappily 
obstructed the circulation of cheap knowledge in a po- 
pular form by cutting off the usual means of making 
small remittances, and enhancing the cost of collections. 
This of itself is a great evil, and is only to be compen- 
sated for by some capital advantage, such as I have yet 
to learn ever has been, or ever can be realized from the 



15 

policy of excluding small bills. Although iiiea of all 
parties, and many men for whose opinions I entertain 
the highest respect, have, at times, favored this policy, 
still I hope it may not be deemed arrogance in me to say. 
that I am impressed with the conviction that it was ad- 
vocated and adopted, so far as it was adopted at all, with- 
out all that thorough examination which was demanded 
from its importance and its various bearings. 

My own ideas of this policy, and which will of course 
be taken for just what they may be worth, may be ea- 
sily explained. I suppose it to be entirely settled that 
the currency of this country is to consist principally of 
paper, and not of specie. No man of any reputation at 
this day openly advocates the expulsion of bank paper. 
The " constitutional currency" has been talked about, 
and there have been those, high in place too, who have 
thought fit to intimate that the time was at hand, when 
this nation would, as it ought, adopt the use of the pre- 
cious metals as the only medium of exchanges. These 
persons have met with a rebuke, however, which hae 
driven them to abandon their ground, or at least to co- 
ver their offensive position behind all sorts of explana- 
tions and excuses. It may, 1 suppose, be set down as 
certain, that no community, at all advanced in civiliza- 
tion and refinement, especially if it be a free community, 
is about to resort at this day to an exclusive metallic, 
currency. 

Now why is it, let me ask, that paper is resorted to at 
all, for use as money, instead of metal '] On what prin- 
ciple is it adopted ? Paper is not, it must be remember- 
ed, an entirely independent substitute for metal. A con- 
vertible bank note is merely the paper title to so much 



16 

coin or bullion as is expressed on its face. It is worse 
than worthless as money, if it be not this, and merely 
this. It does not take the place of coin, or dispense ab- 
solutely with the use of it, any more than the deed 
which a man has of his farm takes the place of the farm 
of which it is the evidence of title. The instrument is 
portable, while the acres are not, and by its means, the 
acres themselves may be transferred from one owner to 
another, not only with facility, but with perfect security, 
and that at the distance of a thousand miles from their 
location, as well as if the parties were actually standing 
on the soil itself. 

Metal is an expensive article. It could not be used 
as money if it were not ; nor w'ould it be fit for use as 
money, if there was not a natural and ascertainable 
limit beyond which it cannot be profitably produced. 
But while, on the one hand, a material of value is indis- 
pensable to constitute a common measure of values, and 
a basis for a comm.on medium of exchange, yet it is al- 
ways true, on the other hand, that such a material is 
used, if at all, only at a dead loss of so much productive 
capital. Gold and silver, in use as money, are in them- 
selves utterly improductive. 

They are emplo3^ed in making exchanges of property: 
they create no values ; they add nothing directly to 
wealth when thus used ; they are so much dead capital 
in the hands of those who are obliged to employ them 
in active business ; and to keep them in actual service 
for making exchanges, when a paper representative 
would answer the purpose equally well, would be just as 
wise as it would be if a merchant should use a gold or 
silver yard-stick instead of one of wood or brass, w^hen 



17 

this last would perform the service of a yard-stick quite 
as well. 

By the use of paper, the expense of keeping a large 
amount of coin is saved. There must still be enough 
to constitute the proper basis of the paper circulation, 
and enough to answer all the demands which the hold- 
ers of the paper are likely to make upon it. But this 
amount is comparatively small, and all the residue is set 
free to be employed as active and productive capital. 
The commercial world is settled in the conclusion, and 
it is a matter about which there is no difference of opin- 
ion, except as that difference of opinion has manifested 
itself in this country within the last eight years, that in 
commeix:ial transactions, paper is absolutely indispen- 
sable. 

You must return to a state of comparative indigence, 
you must cease to give employment to the industry of 
the country as you now do, business and enterprise to a 
great extent must be suspended, or you must adhere in- 
flexibly to your settled system of a convertible paper cur- 
rency. Bills of exchange and bank notes can never be 
dispensed wath in the transactions of an extended com- 
merce. Gold and silver could never perform the office 
and service which they perform. 

Valuable even as gold is, the bulk and weight of it, 
and the time and labor necessarily consumed in weigh- 
ing, or counting, and transporting it, when employed in 
heavy business, render it wholly unfit for the uses of 
money. And if metal, or some material of intrinsic va- 
lue must be used, we must find something better than 
gold and silver. In Russia, it is understood, that platina 
has been coined for money, and in regard to its superior 



18 

■ value, has one advantage over gold, for heavy transae 
tions. 

But there are objections to it, and, besides, even this 
material is not dear enough to make it a competent me- 
dium in very large exchanges. Diamonds have been 
resorted to ; but are utterly unfit for common use as mo 
ney for a variety of reasons. 

Now convertible paper is just that instrument, which^ 
by its constant and steady reference to specie, at the 
same time that it dispenses with the actual use of it in 
exchanges, enables the trading public to perform its ex- 
tended operations in business in spite of a want, which 
otherwise would be most severely felt — which otherwise 
would certainly impede and arrest these operations. 

A money of intrinsic value to answer the large de- 
mands of connnerce, would need to be some material 
which, without being more ponderous or bulky than gold, 
must, quantity for quantity, be vastly more costly — so 
that one eagle of such material, would suffice for ex- 
changes which would require a hundred or a thousand 
eagles of gold. And then if such a material could be 
found, it is easy to see that it would be utterly useless in 
all smaller transactions, in consequence of the minute- 
ness of the pieces to be employed. Indeed it is, in my 
judgment, impossible to conceive of any material for mo- 
ney which, in actual circulation could answer the valua- 
ble and indispensable uses, for which convertible paper 
is now employed. 

But I do not regard paper as useful only in large tran- 
sactions ; it is equally useful in smaller. We are apt, 
I think, to commit a great error in the estimate we put 
on the ordinary and every day business of life. We 



19 

greatly underrate its aggregate importance. We iook 
at drops of water, and we forget that the ocean is made 
up of such. Our attention is arrested by the proportion 
and magnitude of some individual operations, and we 
forget the superior aggregate value of vast numbers of 
others, because eacii is of itself so humble and unpre- 
tending. We look at an individual trading on a capital 
of a million, and forget that the trade of ten of his neigh- 
bors who operate on a capital of one hundred thousand 
dollars each, is equally important ; and what is more, 
we forget that the trade of fifty others who operate on 
capitals of fifty thousand dollars, and of yet thousands 
of others who use still smaller capitals, down even to 
very humble amounts, is vastly more important. Let 
gentlemen consider the importance of money for the 
common business of life. Consider our two millions of 
inhabitants, our three hundred and fifty thousand voters, 
with an equal number of females ; seven hundred thou- 
sand persons making payments almost daily in sums 
under five dollars. It is impossible to say, sir ; I have 
not the data on which to make the calculation ; but I. 
am inclined to believe that the total of payments made 
in this state, in a given period of time, in sums under five 
dollars, is greater than the total of cash payments in 
sums above that denomination. And if this be so; or 
even if this conjecture approaches the truth, does it not 
give great importance to a subject like that now under 
consideration ? And if it be admitted that convertible 
paper is not to be dispensed with as an agent of ex- 
changes, where sums above five dollars are required, be- 
cause of its superior convenience and fitness, with what 
propriety can it be contended, that it is not equally fit 



20 

and convenient for that vast aggregate business, requir- 
ing money below that denomination ? Undoubtedly, 
there is a limit of denomination below which the issue 
of paper ought not to be allowed. That hmit is ascer- 
tained in thisj as in every country, by experience ; and 
experience, I think, has shown that paper should be 
used for all sums except the fractions of a dollar. 

Sir, closely connected with the view now presented, 
is another, which has great influence with me, and which 
leads me to regard the restraint on the issue of small 
bills with abhorrence. I think that any policy which 
unnecessarily separates between the poor and the rich, 
is, and must be, in the mind of every fair man, odious. 
If convertible paper is a better currency than metal, 
cheaper and more convenient, then it is monstrous, to 
furnish the rich with paper, and turn off the poor with 
metal; and neither the propriety, nor the morahtyof the 
measure, is at all improved by successfully deluding the 
latter class into the notion, contrary to the truth, that 
they have the better currency of the two. But if, on the 
other hand, metal is a safer and better currency than 
convertible paper, then I insist, if you provide a currency 
of metal for one class, you are bound to provide it for 
all. It cannot have escaped observation — w^e have had 
some evidence of it in the course of this debate — that 
metal is insisted on as money when small money is re- 
quired, because that is the money of the poor. Sir, for 
myself, I repudiate all such notions ; the principle is a 
vicious one, and as the basis of legislation, I declare that 
I know of nothing more odious, or more mischievous. 
Give to the community, and the whole community, a 
safe and sound currency for all classes, and for all tran- 



21 

saction?, and then you will have done your duty to the 
poor as well as to the rich. 

But, Mr. Chairman, gentlemen have offered several 
reasons why, in their judgment, this bill ought not to pass: 
and I propose to examine the strength of those reasons. 
Among these grounds of opposition it is urged that a 
currency of small bills is ?/??5a/e— especially for the poor. 
Now, in the first place, I remark, that it is as safe for 
the poor as it is for the rich. There is as much of it^ 
when it circulates, in the hands of the rich as in the 
hands of the poor — probably a great deal more. And if 
there be any good reason why any one class in the com- 
munity ought not to be trusted with it, then it ought to 
be withheld from the whole. 

Two suggestions have been made as shewing why this 
sort of currency is unsafe. The first is, that it is hable to 
be counterfeited. And so, sir, is that of a higher denomi- 
nation, and much more liable than the small bills, be- 
cause just as easy and vastly more profitable to the coun- 
terfeiter. I apprehend, sir, that this notion that notes 
under five dollars are more likely to be counterfeited 
than those above, has been drawn from the fact that 
that happened to be the case with the five pound notes 
of the bank of England, and which was undoubtedly 
one of the resons why that circulation was withdrawn. 
This was not, however, the only reason. England had 
a system of free banking— nearly so every where — en- 
tirely so sixty miles out of London. Under this system, 
it was found that country banks, being unrestrained in 
the character of their issues, and unable to establish 
themselves sufficiently in the confidence of the public to 
keep out notes of the larger denominations, resorted to 



issues of small notes, which they had credit enough to 
circulate, though too often they had neither capital nor 
honesty enough to redeem. This was one evil which 
led to the exclusion of small notes in England. But 
the other evil suggested— that of the facility with which 
counterfeiting was committed— undoubtedly aided in in- 
ducing the government to interfere. Neither the coun- 
try banks, nor the bank of England bad taken any 
pains to have their notes properly engraved — especially 
those under five pounds. Nor was it of any benefit to 
the bank of England to issue small notes, particularly if 
obliged to procure expensive engravings, as it never re- 
issues its notes — not even though drawn at one end of 
the counter, and immediately presented for redemption 
at the other. They are received and instantly cancel- 
led. It was, therefore, in England, rather the interest 
of the bank than of the community, that small notes 
should be withdrawn from circulation. We know very 
well that our system is widely difierent. Our banks re- 
issue their notes at pleasure, and as often and as long as 
they continue fit for circulation; and the character of the 
engraving is much the same in the bills of all denomi- 
nations issuing from the same bank. It is as diflficult 
a matter to make a successful counterfeit of a one dollar 
bill as of a five or ten — a difl[iculty, in regard to the 
whole subject, which is greatly increased with the ad- 
vance, if not perfection to which the art of engraving 
has now attained. 

The other suggestion, as shewing that small bills are 
unsafe, is that the solvency of the banks may be doubt- 
ful. But if the solvency of the banks is really doubted, 
that doubt should go for the benefit of all who have any 



23 

thing to do with any of their issues. For one, sir, I 
have no idea of any such duty as that of legislating ex- 
clusively for the poor. That may be a doctrine of nno- 
dern democracy, and it may suit the notions of some 
gentlemen on this floor, but it will never satisfy me. And 
I deny the constitutional right of any member to be 
here, as some seem to be, for the purpose of conducting 
legislation, as far as may be, on any such narrow, par- 
tial and exclusive principle. But touching this subject 
of security to the bill-holder, I think the tone of the gen- 
tlemen in the opposition must be allowed to be some- 
what changed. It certainly has been the fashion in 
this state, especially among those who have claimed to 
be of the democracy, to sing praises to the Safety Fund, 
as making the banks the securest in the world. Is not 
that so? And is it possible that gentlemen are now pre- 
pared to say that their boasted Safety Fund offers no se- 
curity to the holders of our bank-note currency? For it 
must be admitted certainly, if it be worth any thing as 
security, it is worth as much for notes below, as for notes 
above five dollars. For myself, I never had, and have 
not now, a very high opinion of your safety-fund sys- 
tem. I have always been impressed with the sentiment, 
that it was introduced and sustained, by those who best 
understood what they were about, for the purpose of 
cheating the people into a confidence in banks altogether 
beyond the real merits of that part of the system. As 
far as the fund itself goes, every body of course ac- 
knowledges that it is a substantial security ; but I think 
a better might be devised, and I think the banks all 
along have rested, and that they now rest, on a basis of 
security better than this, and to which this feature in 



ihe system really contributes very little. Yet, whether 
this be so or not, it is certainly a little strange that gen- 
ilemen who have been the friends and sworn advocates 
of ihis system^ early and late, who have supported it 
and been supported by it^ should now profess to enter- 
tain doubts about the solvency of the banks, the Safety 
Fund to the contrary notwithstanding- that they should 
seriously object to restoring to the banks the right to issue 
small notesj on the ground of an avowed apprehension 
that they would never be able to redeem them ! Let not 
gentlemen attribute their loss of confidence in the banks 
to the suspension of specie payments. The suspensiori 
is bad enough without aggravating, or adding to, the 
evils which properly belong to it. It is undoubtedly true 
that, in a commercial sense, a bank fails when it can no 
longer pay its notes in specie if demanded. But if an in- 
dividual may, and often does, suspend payments entirely, 
and yet be perfectly solvent, the suspension of payment«^ 
in specie by a bank, where it still goes on to meet all 
its engagements in the only currency that is left to the 
country, is not even evidence prima facie that it is in- 
solvent. It is true, that a suspension necessarily throws 
every thing into confusion. Currency becomes de- 
ranged, and prices are unsteady, and property is of un- 
certain value. But in the circumstances of the country 
at the time it took place, suspension was not the greatest 
evil which could happen. If it had then been univer- 
sally insisted on that nothing should be received in pay- 
ment of debts, in any quarter, but gold and silver, uni- 
versal bankruptcy of course must have succeeded. The 
banks would have been insolvent, because all their 
debtors would have been insolvent, a scene of unpa- 



25 

ralleled suffering, perhaps of anarchy, would liave en- 
sued. 

But my final answer to this objection of the probable 
want of soundness in the banks, is a broad one. It is 
an objection, which goes to their present issues, and to 
any they may make, in bills of five dollars and up- 
wards, as well as to the issues for which this bill pro- 
vides. And if gentlemen are sincere, they are bound to 
see that banks, which have not the ability to redeem 
their small notes, if they should put them out, shall not 
be allowed to issue or keep afloat their lage ones. 

But, Mr. Chairman, I corne now to consider another 
reason, which has been urged, why small bills ought 
not to be issued. Gentlemen begin with the position, 
that there can be no such thing as a safe bank-note cir- 
culation, which is not based on specie — and in this po- 
sition I cordially concur. I suppose, if there be any one 
proposition in political economy, or in regard to currency, 
which is entirely settled, it is this. At any rate, I agree, 
as a general principle, that if you use paper for currency, 
it must be a paper, convertible into specie, at the will of 
the holder. In other words, I agree, that an issue of 
paper, on a property basis only, and with no other limit, 
or restraint, than what is imposed by the limited amount 
of such property, is utterly unsafe, and sooner or later, 
will always be depreciated. But I regard it as a very 
great error, though a very common one, into which gen- 
tlemen here have fallen, when they insist on having 
nothing but metal money in circulation, under the de- 
nomination of five dollars, or any other particular sum, 
under the idea that it serves as a basis for the paper cir- 
culation above that sum. The two things it seems to 

3 



26 

me, have no sort of connexion with each other. It is un- 
true in fact that you create a specie basis for paper in 
circulation, by establishing a distinct circulation of specie- 
along side of it. The truth simply is, that you thus 
have two disconnected currencies instead of one. The 
streams come together indeed at the point of confluence, 
and flow on together in the same broad channel, but they 
never do, and they never can be made to, commingle 
and unite. 

Sir, what is the object of a specie basis for a paper cir- 
culation? There are two ends to be answered by it. 
One is to have the means of payment, in that material, 
to meet any demands which may be made for it. For 
this purpose alone, the basis ordinarily need not be large; 
for experience shews that probably not one person in five, 
holding bills will demand the specie ; frequently, in times 
of security and confidence, not one in twenty, or even 
one in a hundred. For this reason it is that banks may 
be safely conducted with paper out, greatly exceeding 
the actual amount of specie on hand. In this particu- 
lar, the business of a bank is very much what the busi- 
ness of any fair trader is. Specie is the only legal ten- 
der; every creditor may demand it of every debtor; 
but it is not demanded except in comparatively rare in- 
stances ; and in conducting a business, great or small, 
the principle of safety only requires, that full provisions 
should be made for the demand, whatever in practice it 
is likely to be. This then is one object of a bank specie 
basis. And now, in regard to this object, what is gain- 
ed to the community by having a specie circulation esta- 
blished by the side of a paper circulation? It is the bank 
that is to redeem its paper, not the community. If yon 



27 

present a five dollar bill at the counter of a bank for 
coin, you do little to facilitate the transaction by having 
five dollars of silver already in your pocket ; and I con- 
clude (he only proper place for a specie basis, to meet 
the current demands of a paper circulation, is the vaults 
of the banks. 

But it is said, that a mixed currency, consisting partly 
of paper and partly of specie, affords the best security 
against over issues; and this brings me to consider the 
other, and the more important, use of an ample specie 
basis. I desire it to be remembered all the while, that 
what is thus called a mixed currency, is in truth no such 
thing. It is always the case of two distinct, and, in 
some respects, opposing currencies, and in the nature of 
things they can not mingle and become one. The one is 
not a basis for the other ; one may be above the other, 
but does not rest upon it ; and the notion that any con- 
siderable check is thus given to expansions and the evils 
of redundancy to which paper always tends, is, in my 
judgment, entirely unsound. This check can only 
be given by a sufficient specie basis m vault, kept in 
some fixed and adequate ratio to the whole amount of 
paper in circulation. It is this office of a specie basis, 
on which I am prepared at all times to insist] and I 
avow my solemn conviction and belief, that as nothing 
else ever has been found, so nothing else ever will be 
found, which will operate effectually to repress undue and 
destructive expansions, in a currency consisting chiefly 
of paper, and keep it in a sound and healthy state. 

Let us see now if any principle can be found in a so- 
called, mixed currenc}^, to check expansions. We will 
suppose that this whole country may require, for ita 



28 

actual exchanges and the employment of its captal and 
industry, a currency of a hundred millions of dollars. 
Let us then be supplied with eighty-five millions of pa- 
per and fifteen millions of specie, the line of demarca- 
tion between the two currencies being drawn at the five 
dollar point, the specie of course moving in the lower 
plane, and the paper in the upper. Now comes a time 
of great activity in business. Men are stimulated, and 
they stimulate each other, to extraordinary action. Pro- 
perty advances in value. Speculation begins to make 
large promises, and excite high hopes. Money is in de- 
mand ; the banks begin to be importuned ; and as eve- 
ry thing looks prosperous and bright, they catch sympa- 
thetically the tone of feeling without, and they become 
hberal and generous even beyond their wont. Debtors 
are treated with great lenity, because securities seem 
abundant, and new issues of paper are freely made. In 
this way the sum of the circulation is greatly increased, 
while, it must be remembered, your specie remains sta- 
tionary. But it will not remain stationary long. Let 
your circulation go up to one hundred and fifty millions 
— a hundred being still all that the actual business of 
the country requires — and before you get to this point 
your specie in circulation will begin to disappear. You 
have now a redundant currency, and of course a depre- 
ciated currency, always manifest in a general rise in 
prices, and the specie is depreciated in the same propor- 
tion as the paper. It is now worth more abroad than it 
is at home ; a demand for it begins to be felt, and hoard- 
ing becomes the order of the day. So much of it as was 
in circulat'on, or a great part of it, disappears. The 
farmer, and the tradesman, and the thrifty laborer all 



29 

put it by. The banks can not get perhaps a dollar of 
U ; and no considerable part of it goes out of the coun- 
try to meet and check the foreign demand. That de- 
mand, in nearly all its strength, whatever that may be^ 
must be met by the banks ; a pressure ensues, and to 
encoimter the crisis, and save themselves, there is one 
only way — and that is to withdraw their paper as rapid- 
ly as possible. And this is the ordinary operation of an 
expansion and contraction of th€ currency ; and I invite 
gentlemen to consider well if they can find an}/ thing 
in their favorite plan of a double and antagonist circu- 
lation, to prevent or to check it. Certainly I can not. 

But again, sir, on the point of expansions, and whether 
the tendency that way is checked, by the presence of 
specie in the lower channels of circulation — how are the 
facts? I shall not go into this subject, except so far as to 
refer gentlemen to the actual workings of this system. 
In England, small notes are not now issued ; once they 
were. Let it be shewn that expansions were greater 
and more frequent in the one period of their bank histo- 
ry than in the other. In Scotland on the contrary, 
small notes circulate and ahvays have, I think, circulated ; 
and no banking system perhaps was ever as free from 
the vice of expansion as this. From the beginning of 
banking in that kingdom, it is understood there has 
been but a single bank failure ; and I do not know that 
that occurred as the consequence of any over issue. 
How has it been in Pennsylvania, in Maryland, and 
other states, where the policy of suppressing small notes 
has been long and thoroughly tried? And what has been 
the experience of these states, compared with the opera- 
tion of a different system in New^-England, in regard to 

3* 



30 

expansions? In Maryland, it is now proposed by the go- 
vernor in his recent message, to return te the use of 
small notes. And finally what has been the experi- 
ence of our own state in this matter? Has our paper cir- 
culation been less since the prohibition of small bills than 
before? I have not looked at it lately, but I have no 
doubt an examination would shew, that the aggregate 
issues of our banks since the prohibition have not been 
materially diminished — increased rather ; and recent 
events are enough to satisfy every one that expansions, 
and the worst consequences of expansions, are in no de- 
gree prevented by the substitution of specie for any part 
of the paper circulation from one dollar upwards. And, 
sir, the more I reflect on this matter the more I am sa- 
tisfied, that this hard money policy, even to the extent 
of excluding small bills, if it should go no further, is not 
the policy for this country. It is a good enough policy, 
possibly, for England ; a better one perhaps for France ; 
better still for Austria, and better than all for Russia ; 
but it will never do, I am sure it will not, for a country 
where the people are already advanced in wealth, in cul- 
tivation and general intelligence, or where it is intended 
they ever shall be. 

And now, Mr. Chairman, I have gone through with 
all the observations, which I have thought it my duty 
to make, on the merits of the bill on your table. But, 
sir, as I remarked in the outset, this debate has taken a 
wider range, and I hold myself bound to proceed a step 
further, and notice the positions and arguments of gen- 
tlemen on several points connected, though it may be 
somewhat remotely, with the main subject. So far as I 
now recollect, nothing has been offered to the committee in 



31 

opposition to this bill, beyond what I have already com= 
mented on, which requires me to regard it as having 
been advanced in any other than a spirit of hostiUty to 
banks, to bank paper, and banking business in general. 
In this way I do, and must, regard it ; with what rea- 
son, must be left to appear in the course of my observa- 
tions. 

It has been said, sir, that those who support this bill 
are the friends of banks. Well, I believe that is so. For 
one — for I speak for myself in this matter — I am in fa- 
vor of a convertible paper currency, to the extent already 
indicated in my remarks ; and I am the friend of banks, 
as the constituted public agencies by which that cur- 
rency is to be furnished. I am the friend of banks, just 
as I am the friend of the steam-engine, which may be 
used to propel a boat in which I may choose to become 
a passenger, because it carries me forward to my desti- 
nation. I am the friend of banks, as valuable, and, at 
present, indispensable institutions of great public impor- 
tance. In any other sense I am not the friend of banks. 

In regard to the mode in w^hich banking business 
shall be done, I have certainly some settled notions on 
that subject. I am opposed to unrestrained banking ; 
but by no means to a general banking law. I insist on 
the necessity of some legal and effectual check on bank 
issues ; but the proper restraint can always be imposed, 
whether it be our policy to furnish ourselves with a cur- 
rency by means of corporations, or joint-stock companies, 
or individuals. In either way, it would be easy to pro- 
vide for the perfect security of the bill-holder, and for the 
protection of the community against the monstrous evils 
of unlimited issues. As to our existing system of bank- 



32 

ing in this state, I do not think it free from faults. I 
think it may be improved, greatly improved ; and yet, I 
am not only the friend of banks, but I am the friend of 
the present subsisting banks of this state. I desire to 
see them preserved, and not destroyed ; I desire to see 
the public faith strictly kept with them, to see them pos- 
sessing, as they may deserve, the unshaken confidence 
of the community, and fulfilling the great purpose of 
public benefit for which they were created. 

Now I ask gentlemen who have addressed the com- 
mittee in opposition to this bill, with a single exception, 
whether they think they can say as much ? They 
charge, in the way of reproach, on the political majority 
of this house, that we are the friends of the banks. 
Well, what do gentlemen mean by this? Will they, af- 
ter this, deny that they entertain a feeling of hostility to 
banks? I take it for granted, that gentlemen who have 
any respect for themselves, or any just regard for decen- 
cy, do not mean to charge it on the majority that we 
are the friends of the banks in any odious sense? They 
do not mean to be understood that the majority come 
here purchased, or corrupted, by the banks, or under 
any improper influence whatever in their favor or be- 
half Not one of them will say that. And the infe- 
rence seems to be irresistible, when they make it matter 
of complaint and reproach, that we are friendly to bank- 
ing institutions, and to a currency of convertible paper, 
that as for themselves, they are oppposed to them all. 

One gentleman who addressed the committee, inform- 
ed us that banks were wrong in their origin, and he 
justified the favor with which, in former times, he may 
have regarded them, solely on the ground of what he 



33 

then supposed to have been the stern necessities of the 
'case. Another gentleman argues that as banks were 
wrong in their origin, he could find no apology for their 
having ever been created in any idea of necessity. 
Why, gentlemen, I pray you, shew us what you aim 
at? If we are to have no banks, how are we to have 
bank paper? And if your objections go to the banks only, 
and not to the currency, will you inform us how that 
currency is to be supplied? Do you propose any other 
mode? And if not, then I ask, if all this does not look 
as if there was, in that quarter, a settled and deter- 
mined aversion to all banks, and to all bank paper? I 
confess that I have not been able to resist this convic- 
tion, after considering attentively the whole course of this 
debate, and the character of the opposition which has 
been offered to this bill. 

One objection made to the passing of this bill, is that the 
banks do not pay specie for their bills, and this is offer- 
ed as a reason why the community shall not be allow- 
ed to have a small bank-note currency. If the people 
will employ such a currency at all, they shall get it 
where they can, at their own hazard, and in the face of 
a highly penal statute forbidding its use. Sir, is it not 
manifest, that this is not so much an objection to the 
present bill, as it is an objection to banks? It strikes at 
the foundation stone of every banking institution in the 
state. In the absence of specie for circulation, the utter 
impossibility of enjoying any such use of it at present, 
it is demanded by the people, that they may be furnish- 
ed with something to supply its place — and what is the 
answer? No; you can have nothing but bank notes, 
and we will not allow you to have bank notes, because 



34 

the banks have suspended payments in specie — and this 
is broad ground, and goes, of course, as much against 
the use of large notes as of small. 

But gentlemen go a step farther. They are not con- 
tent with refusing the rehef asked for, but they have a 
remedy of their own to propose. They would repeal the 
law of May last, which released the banks, for one year, 
from the penalty of forfeiture for refusing payments in 
specie! This is their remedy. They are for a specie 
currency to as large an extent as may be, and they 
would say to the banks, at once, give us specie in forty 
days from this time, or take the consequences. But are 
gentlemen quite sure that the banks can resume on such 
brief notice? They profess to think so ; and upon what 
evidence? The gentleman from Jefferson, (Mr. Ward- 
well,) finds this evidence as I understand him, in the re- 
port made by several members of the late bank conven- 
tion in New- York. Sir, I read that report differently. 
I think it winds up with the opinion, strongly expressed, 
that it will be found extremely difficult, at any time, 
against the will and without the co-operation of their 
neighbors, for the banks in this state to return to specie 
payments. 

[Mr. Wardwell explained. He had referred to the 
published journal of the proceedings of the bank conven- 
tion, by which it appeared that the delegates from New- 
York voted for a resolution fixing the time for resump- 
tion by the banks generally on the 4th of March next.] 
But that proposition was not adopted, and we have 
now the opinions of the very persons who voted for that 
resolution, stating the difficulties in the way of partial 
resumption — the very difficulties sought to be avoided 



35 

by the proposition to which the gentleman alludes. 
And yet, on no better evidence than this, of the ability 
of the banks to resume, without further delay, gentle- 
men insist on repealing the suspension law. Sir, would 
this be wise legislation? Would it be rational? Would it 
be safe? For one, sir, 1 can not consent to try so hazard- 
ous an experiment. I would not disturb the suspension 
law. I would give the banks their full time, in the con- 
fidence that, though at great sacrifices, they will resume 
within the period indicated by that act. 1 believe they 
are in as good a condition to resume, as any banks in 
the Union ; perhaps better than any ; but this matter of 
resumption is not so easy and safe a thing as some seem 
to imagine ; especially if the banks of New- York must 
rise up alone and unsupported to meet the shock. I re- 
peat that I believe the banks can and will resume be- 
fore the 16th day of May next; I believe they will do 
this with the more ease if they would themselves fix the 
day ; but, at any rate, 1 would give them all the time, 
now allowed them, to strengthen and prepare themselves 
for the event ; and I declare that I can discover nothing 
in the attitude which gentlemen have here assumed to- 
wards the banks in regard to this matter, but new evi- 
dence of hostile feeling towards all our banking institu- 
tutions. 

[Mr. Mann, here asked permission to state a fact on 
which he founded his belief that the banks could re- 
sume in forty days — in forty minutes he might say. He 
referred to the fact, that during the past year six millions 
of specie had been imported against ten millions export- 
ed — the difference four millions only.] 

For myself, from the best information I have on the 



subject, I am inclined to think that the balance of ex- 
ports is not as large as the gentleman supposes. But 
what of it, either way? If the commercial debt of this 
country abroad has been paid, it is of little consequence 
to our present inquiry whether it has been paid in pro- 
duce or in specie. The fact, I presume, on which the 
member from Herkimer would rely is, that, whether our 
foreign debt be paid, or not paid, or if paid, whether paid 
in one w^ay or another, it is at least quieted, and the fo- 
reign exchanges, from having been greatly against us^ 
are now in our favor. And then I must be allowed to 
say, that if he takes this fact alone as entirely decisive 
of the question of the ability of the banks in New- York, 
at once, and without concert, to resume, and would com- 
pel them accordingly, I must deem him an unsafe coun- 
sellor, and legislator, either in regard to the interests of 
the banks, or the interests of the community. 

Sir, we must not forget, on such a subject as this, that 
there are some pecularities in our condition in this coun- 
try. It must not be supposed, because the bank of 
England may be relieved from all apprehension of a de- 
mand for specie the moment foreign exchange is in favor 
of London, that therefore the banks of New- York must be 
relieved also from any such apprehension whenever fo- 
reign exchange ceases to be against that city. We pos- 
sess a widely extended country, composed of twenty-six 
local sovereignties, of all which New- York is the money 
centre, as London is the money centre of half the world- 
What we call domestic exchange as applied to New- 
York, is precisely what foreign exchange is as applied to 
London ; and it is just as important, for the security of 
banks in New- York, with reference to resumption, that 



37 

they should be free from ruinous demands for specie 
from Philadelphia, Charleston or New-Orleans, as it is, 
that there should be no ground for such demands from 
Paris or London. What the precise state of the domes- 
tic exchanges may be at the present time, I shall not un- 
dertake to say ; it is enough to know, that they are not 
equahzed, and that it is, to say the least of it, utterly 
unsound and untrue, that the ability of our banks to re- 
sume depends simply on the naked fact, whether foreign 
exchange is, or is not, against us. And I repeat, sir, 
that when I see gentlemen of intellegence, instead of 
opposing the bill before us on its merits, resorting to such 
a measure of opposition as that now proposed — a mea- 
sure of extreme hazard, if not of certain destruction — 
and with no better grounds than those now offered to 
justify the professed belief that that measure would be 
innocent if not salutary — when I see this, I think I am 
free to conclude, that all this proceeds from a determined 
spirit of hostility to banks and bank currency. 

Sir, there was another and a distinct reason, though 
nearly related to the last, offered why this bill ought not to 
pass. The objection I have already considered was, that 
small bank notes, if allowed to be issued, would not be 
immediately convertible ; the position I now refer to was, 
that the banks ought not to have the privilege of issuing 
small notes because of the offence committed by them, 
in suspending specie payments. And this is the an- 
swer gentlemen would give to a demand, made by the 
community with singular unanimity, for a currency of 
small bills. The people say — give us a currency — al- 
low us to have money for the transaction of our necessa- 
ry business ; and the answer is, the currency you seek 

4 



38 

13 to be furnished, if at all, by the banks, and the banks 
shall make no such issues, no matter what may be your 
necessities, because possibly it might result in some pe- 
cuniary advantage to those offending institutions. 

It would be something, if there was any justice in the 
imputation cast on the banks. For myself, I have seen 
no evidence that the suspension was exclusively the 
fault of the banks. My own opinion clearly is, that the 
suspension never would have occurred, but for the gross 
mal-administration of the general government in regard 
to banking, the currency, and other kindred subjects. 
And yet, if it were admitted that the tenks suspended 
without necessity, and only to accommodate themselves 
— a supposition ]3oth idle and absurd — still I should 
think that fact, when offerd to oppose the measure now 
under consideration, to be an argument much more like- 
ly to prove the hostile temper and disposition of those 
who advance it, towards all banks and bank currencies, 
than to convince any body that this community ought 
not be supphed with small bills. 

But, Mr. Chairman, this measure is opposed on 
another ground ; or rather I should say that this occa- 
sion has been seized to charge amongst other things, 
that the banks have been exempted by law from the 
payment of their debts in specie, as every citizen of the 
state is obliged to do. As the charge was first made, it 
was untrue in fact. The banks enjoy no such exemp- 
tion. They are just as liable to pay specie, and to be 
prosecuted for refusing to pay specie, now, as before the 
suspension act was passed. It is true that when that 
act was passed, a provision was inserted in the law the 
whole object of which was, to save the banks from the 



39 

petty malice of the restless enemies of all banks, by taking 
away from them the right to recover costs on suits mere- 
ly vexatious in their character and design. And I am, 
in no degree, surprised to find gentlemen here making 
loud and bitter complaints of this salutary and indispen- 
sable provision. 

Next to this, sir, we have had another charge against 
the banks ; that charge is, that the people of this coun- 
try lost twenty millions of dollars at the time of the sus- 
pension, by the depreciation of the bills of the banks 
then in circulation. 

Sir, if this were true, it would be difficult I think to 
shew what necessary connexion it has with the proposi- 
tion now before us. But it is not true ; and before gen- 
tlemen arm themselves with weapons of this sort, if they 
mean to use them to any good effect, they would do 
well to assure themselves that the steel is of temper to 
cut. What do gentlemen mean when they talk of a 
depreciation of bank paper, and a loss upon it by reason 
of that depreciation? That it has been depreciated c.v 
compared with specie^ is undoubtedly true ; and that 
the whole community, with one voice, consented to 
adopt it as the temporary currency of the country, in 
the place of specie, is also true. But where is the evi- 
dence of this loss of twenty millions? Bank paper was 
in circulation, and used as currency, up to the moment 
of suspension, and it continued to be so used afterwards ; 
and I know of no facts to shew that, as currency, and 
as compared with property generally, it was not worth 
about as much after, as before that event. 

But, sir, the most serious charge brought against the 
banks in the course of this debate, is the old and fa- 



vorite one, in certain quarters, that they are monopolies. 
What is a bank? solemnly demanded the member from 
Herkimer, (Mr. Mann,) and the solemn answer was — 
it is a monopoly. Now, sir, I take issue on the fact. 
I deny that banks are monopolies, according to any de- 
finition with which I am acquainted, or even according 
to the gentlemen's own definition. I understand a mo- 
nopoly to be a privilege granted to a company or an 
individual to conduct some business or trade from 
which all others are excluded. Such a monopoly was 
granted to the East India Company. I know of but 
one instance of a strict monopoly existing by law in 
this country, and that is one to which nobody objects. 
I mean the exclusive right which is secured to an in- 
ventor. Copy-right is not strictly of this character, be- 
cause that is no more than the security of a natural right 
which every man has to the produce of his own indus- 
try. The other is a monopoly, because, though, as often 
happens, the same identical invention may be repro- 
duced, yet the right is secured exclusively to the first in- 
ventor. Now so far as I remember, this is the only true 
monopoly known, at this day, to the laws of this coun- 
try. There may be others ; but if there are, banks are 
not of the number. The settled policy of this country 
has been to supply the local currency in the several 
states, by means of banks created under state authority ; 
but these banks have had no exclusive privileges — cer- 
tainly not with us. It has undoubtedly been the prac- 
tice of the American governments, as it has of almost 
all others, at times, to contract with corporations for cer- 
tain indispensable services to be rendered to the public, 
on the best terms in their power to make, and occa- 



41 

-sionally the governments have not scrupled to pay for 
such services by a grant of privileges. In all this I see 
no violation of principle and no unjust interference with 
individual rights. It is necessary for the communiry 
that certain things should be done ; and if the state, 
whose business it is, can not well do them under its own 
officers and with its own money, it may cause them to 
he done under contracts with individuals or companies. 
This is the poKcy under which our turnpikes, many of 
our bridges and rail-roads, and some of our canals, have 
been constructed ; and in every such case, the tolls are 
the means of compensation and indemnity, and exclu- 
sive privilege to a certain extent, is implied in every 
such contract. But bank charters, at lea;?t in this state, 
<iarry with them no such privilege, impHed or expressed ; 
and it is no matter how many banks exist already, the 
state has always felt itself at liberty to grant as many 
new charters, as the business wants of the community- 
might seem to require : and more than this, it is at per- 
fect liberty, if it chooses, to throw open the business of 
banking to all who desire to enter into it — the only ques- 
tion in such case to be considered, being purely one con- 
cerning the common safety. All that can be said of it is, 
that the business of banking heretofore in this state, has 
been conducted only under license and authority from go- 
vernment. It has been supposed to be a business, which 
considerations of public security required to be controlled 
and regulated by law, and that it would not do to allow 
any body and every body, who might be so disposed, 
freely to do their part in supplying the country with so 
important and delicate an instrument and agent as that 
of currency. Whether there be or be not error in such 

4* 



42 

a position, is nothing to the present purpose. Such has 
been the policy of the state, and the creation of banks 
on such a basis is not the creation of monopolies, but 
only the establishment of public agencies, by means of 
which the government has undertaken to discharge the 
duty of furnishing and regulating the currency. And, 
at least, I hold it to be incumbent on gentlemen who pro- 
pose to uproot these public agencies, by their cry of mo- 
nopoly, first to satisfy the community that it can get on 
quite as well without these establishments as with them, 
and quite as well without as with any control whatever 
over the currency. 

But the last charge against the banks which I shall 
deem it worth my while to notice, was one that fell 
also from the gentleman from Herkimer. It ^vas that 
banks rob the poor — banks rob the poor! And the 
gentleman favors us w^ith the explanation of this charge. 
Banks it is said, exchange their promissory notes for the 
promissory notes of individuals, charging interest on the 
loan of their own notes, and allowing none on such as 
they receive. That is the explanation, sir ; and this is 
robbing the poor. It is not objected that the rich are 
obliged to pay for the money they borrow ; but the poor 
— the poor are robbed, when they are compelled to pay 
interest for borrowed money — and the remedy for this 
oppression of course is, that the poor are to be supplied with 
bank notes, if at all, gratuitously ! Sir, what is a con- 
vertible bank note? I have said, that it is a paper title 
to so much coin as is expressed on its face ; and having 
that character it is money. The holder uses it as mo- 
ney, in making his exchanges of property, and in facili- 
tating the profitable employment of his productive capi- 



43 

tal. it is money, and if he borrow it of a bank, it is 
borrowed money, and such as no honest man, unless 
he he poor, would borrow and use without paying for 
the use of it ! Carry out the principle, and no man, if 
poovj is to be expected to pay, or give his promise to 
pay, for any description of property whatever. Or if, 
on the purchase of property — as a farm — and going 
into the occupation and enjoyment of it, it be thought 
decent, at least, that he should give his notes for the 
contract price, still that is quite as far as any body 
should think of going vnth a poo?' tnafi, and it would 
be shameful to think of his being asked to pay any 
thing in the mean while for the use and profits of the 
property. Any other course than this would be robbing 
the poor ! 

[Mr. Mann interposed : I must correct the gentleman 
in the language he imputes to me. He puts into my 
mouth the words " robbing the poor." I used no such 
language. I said, what I have said often, and what I 
now repeat. I feel it ; I know it. We hve under a sys- 
tem admirably calculated, by a silent, unseen opera- 
tion —unseen I mean by the mass of men — to transfer 
the products of the labor of those who submit to the 
curse of Heaven pronounced in Paradise, to the pockets 
of those who do not labor. I say that it is the operation 
of the system under which we live; and the gentleman 
from Albany has convinced me of another thing — that 
we live under a bank government.] 

I thought it would come at last to that ; and if any 
body doubted before the gentleman's unquahfied hostility 
to banks, it would seem that all must be satisfied now. 
Sir, what if the gentleman did not use the phrase 'rob- 



44 

bing the poor' — as 1 certainly understood him to do. He 
complained bitterly of the banks for the offence of loan- 
ing theii money to the poor at an interest, and he char- 
acterized it as a silent, unseen operation, by which the 
products of their labor are iniquitously transferred to the 
banks. Sir, if this be so, then if the gentleman does 
not employ the phrase, I will — they do rob the poor. 

But the sympathies of the gentleman are again roused, 
when he thinks of the silent, unseen operation of the 
banking system, in behalf of those who, according to 
his interpretation, are the submissive victims of the 
primeval curse. Sir, there are some differences of opin- 
ion I think about the true reading of that Scripture to 
which the gentleman is so fond of alluding. For my- 
self, I confess that what he seems to regard as a curse 
— namely, the necessity of labor — always looks to me 
like a very choice blessing. In his present position on 
the earth, I ^tnow not how man could escape the very 
depths of degradation and misery, if it were not for 
labor — labor, imposed upon him by a law of neces- 
sity, and always resulting, when cheerfully resorted to, 
and wisely employed, in a harvest of rich enjoyment. 
And then, Sir, whether labor be a blessing or a curse, 
I do not understand how it falls so exclusively to the lot 
of the poor. In my poor judgment the decree finds its 
execution as fully in the person of the gentleman from 
Herkimer, toiling in his appointed place here, as ever it 
did in the moistened brow of the operator in the field 
or the workshop. 

Sir, if there is one thing which I loathe and abhor 
more than another, it is the disposition to create unhap- 
py differences between the rich and the poor. And I 



45 

am sorry to be compelled to say that this has been the 
<evident leaning of this debate, so far as it has proceed- 
ed from that quarter of the house, from the commence- 
ment down to the present time. Let gentlemen beware 
of sow^ing the wind, lest they also reap the whirlwind. 
Let them be honest on this deeply interesting and deli- 
cate subject, and be careful to represent the case truly 
as it is. Let them remember, that all things considered, 
there is great reason to believe that the poor are quite as 
happy as the rich. liCt them teach the rich to emulate 
the poor in their humility and their virtue, and teach 
the poor to emulate the rich in their habits of economy 
and their comforts. Let them teach them all that they 
are brethren of one family, with a common origin, a 
common fortune, and a common destiny — children of a 
•common Father, to\vhom they ow^e a common accoun- 
tability. Let them cherish within themselves thoughts 
and feelings such as these, and sure I am, that we shall, 
in future, hear much less about the peculiar necessities 
and oppressions of the poor. 

Mr. Chairman, in my examination of the various po- 
sitions assumed by gentlemen who have opposed this bill, 
I think I have discovered all along a spirit hostile to 
banks, and the whole banking system. I would give 
them all the benefit of their disclaimers ; but these are 
times when men know not what manner of spirit they 
are of They have asked to be judged by their acts ; 
and so I have endeavored to judge them. 

Sir, I take it that gentlemen would think it unkind, 
if I were to insinuate that they were not the fast friends 
of the present administration of the general government; 
and particularly if I should hint a doubt of their being 



46 

jfirm and. unflinching, in support of the schemes of that 
administration in regard to banks and the currency. 
What then, sir, is the policy of the administration on 
these important subjects? For myself, I believe it to 
be one of resolute hostility to the state institutions and 
the currency which they are employed to furnish. The 
preceding administration had been signalized by an ex- 
terminating and successful war on the Bank of the Uni- 
ted States. President Yan Buren came in with a pro- 
mise to follow in the footsteps of his illustrious predeces- 
sor, and there were the state banks, and who could tell 
what glory might not be gained in a war on them? — 
My own belief is, that he had discovered, or thought he 
had discovered, some short time previous to the late pre- 
sidential election, that there was in this country a de- 
cided and growing popular prejudice against banks, and 
I suppose it to be in entire accordance with his princi- 
ples, and only in harmony with the whole action of his 
political life, never to hesitate about the duty and pro- 
priety of following the manifest indications of popular 
feehng and opinion, tend what way soever they may. 
His doctrine, I think, always has been, that the popu- 
lar will is to be obeyed, not, indeed, whether right or 
wrong; but yet it is always to be obeyed, because it is 
of course always right — it is quite impossible that it 
ever should be wrong. 

When the banks suspended specie payments, then 
certainly, if ever, was the time to begin the war — and 
then the war was begun. As had been done in the case 
of the Bank of the United States, he broke ground a" 
good way off. In the present deranged state of the cur- 
rency, he thought it a good time to establish the policy of 



47 

collecting all the revenues of the government in gold and 
silver only ; a measure as well calculated as could have 
been conveniently devised to prevent the banks from ever 
resuming specie payments. He thought it a proper time 
also, to recommend to Congress what he once regarded 
as an unconstitutional bankrupt law, applicable to cor- 
porations and other bankers only, under which, if for- 
tunate, his own commissioners might soon have been in 
possession of the assets of every banking institution in 
the Union. He proposed his sub-treasury scheme, for 
the safe keeping and disbursement of the revenue, and 
declared his conviction that it had become indispensable 
to divorce the government from every possible connec- 
tion with the banks, or with the currency which they 
emitted, and to make that divorce eternal. And, final- 
ly, in his late message, renewing his sub-treasury pro- 
position, a little modified but made none the less offen- 
sive, he has taken occasion to state his opinion, in the 
face of the nation, that the recent local elections had 
manifested little else than the corrupt and corrupting 
power of the banks over the sentiments and suffrages of 
the people. Now, Mr. Chairman, it is such an admi- 
nistration, recommending such measures, pursuing such 
a course of conduct and policy, so palpably tending to 
the utter destruction of the banks by destroying their 
public usefulness, and whatever confidence the commu- 
nity has ever reposed in them — it is this administration, 
with its entire policy and measures, which commands 
the unqualified admiration and support of those gentle- 
men who have been found arrayed here in opposition to 
the bill now on your table ; — a position, I dare affirm, 
utterly inconsistent with any disposition of favor or for- 



48 

bearance towards banks or any of the valuable uses oar 
purposes which banks are intended to subserve. 

Sir. as nearly as I can understand the times, there 
are in this State, at the present time two, and only two, 
political parties — and they seem to be represented on this 
floor. The one, supported by an immense majority of 
the people, is the party professing those sound and well 
understood republican doctrines which have prevailed in 
the country, almost without interruption, since their 
origin in 1798 ; doctrines which look to the people as 
the source of all political power, and which profess to 
guard against all encroachments and assumptions of 
authority with a sleepless and untiring vigilance ; doc- 
trines which have never, since the day they were first 
promulgated, been openly denied without a signal re- 
buke from the people, and which only one man has ever 
been permitted to violate in practice with impunity. 
This is one of the parties. And the other is that small, 
but determined band of men, professing the sentiments 
of a strong and destructive radicalism ; sentiments which 
look to the prostration of some of the most useful and 
essential institutions of the country, and to the arrest of 
all enterprise and prosperity, because all are not equal 
sharers in the immediate returns; which look to the 
supposed natural hatred of the poor towards the rich, as 
the means of leveUing distinctions and differences among 
men which exist by the appointment of God himself, in 
the very diversity of faculties bestowed upon them, and 
without which it is impossible to conceive that human 
society could be held together. This is the other party. 
The issue between the two is fairly made up, and I pray 
God to favor the right. 



REPORT 

On the subject of religious exercises, and tmb 
use of the bible, in schools: made in the as- 
sembly of new-york, jan. 23, 1838. 

Mr. Barnard, from the committee on colleges, acade- 
mies and common schools, to whom was referred the 
memorial of William G. Griffin and others, asking the 
legislature to enact a law to prohibit the practice of pray- 
ing, singing, reading the Bible, and other religious ex- 
ercises, in such schools, academies and seminaries of 
education, as receive aid from the public treasury, 

REPORTS: 

That the committee have given to this memorial the 
most serious and deliberate consideration. They have 
been deeply impressed with the importance of some at 
least of the questions raised by the petitioners, and in- 
volved, directly or by implication, in the object they are 
pursuing, and the indispensable necessity, if possible, 
of having those questions settled, and settled right, in 
the public mind. In recommending that the prayer of 
the memorialists be not granted, the committee would 
not deem their duty faithfully done, without an effort to 
shew that their conclusions in the matter ate sound and 
just; it is believed that this can be shewn to the satis- 
faction of the house, and, it is hoped, to the satisfaction 
of the petitioners and of the country. 

5 



50 

The substance of the complaint in this memorial is, 
that religious exercises are tolerated in those public schools 
which participate in the public bounty ; and this practice 
they regard as a violation of the law of equality and the 
rights of conscience, as aiding to propagate and enforce 
peculiar religious opinions at the public expense, and 
leading to, if not actually forming, a union of church 
and state. 

In order to understand the force and effect of this com- 
plaint, it will be necessary to look, for a moment, at our 
system of public instruction, to consider what our schools 
are, how constituted and supported, and why they are 
sustained and regulated as they are. 

It happens, unfortunately, that experience does not 
shew that the mass of any people are disposed to keep 
up and support a sufficient and effective system of in- 
struction for themselves by voluntary contributions, and 
it becomes necessary, therefore, for the sake of self-preser- 
vation, that the community should make provision for 
the support of education by law. This necessity was 
early felt in this state, and it has long been, and is now, 
and always must be, the settled and steady policy of the 
state, to furnish aid in support of public instruction. 

To speak of our common-school system only. A large 
sum is distributed annually from the treasury in payment 
of the wages of teachers, and a sum equal to that which 
is thus furnished, and which is the income of a large 
fund devoted to this purpose, is raised by the compulsory 
process of taxation, and applied to the same object. 
Each district, complying with certain prescribed condi- 
tions, receives a share of these public moneys. The dis- 
trict taxes itself, if the majority in it so please, to provide 



51 

the proper house and accommodations for the school. It 
contracts, through its trustees, with a quahfied instructor, 
and provides for the payment of any deficiency in the 
amount of public moneys to pay the wages of the mas- 
ter, by a rate-bill against those who furnish children to 
be instructed. 

In this plan, it will be seen, that while no person, lia- 
ble to taxation, is allowed to escape the duty of contribu- 
tion to the support of popular education, no individual 
is compelled by any law to educate his children at all, 
much less to send them to the public schools. If he 
choose to violate the solemn obligation which his position 
as a citizen, a contractor with the community, imposes 
on him, to fit his ofllspring, by a proper course of educa- 
tional discipline, for the part they are to act in the busi- 
ness of the common government, he is at liberty to do 
so. Especially is he left at perfect liberty, if he will have 
them educated at all, to do so in any manner he thinks 
fit, and under any masters whom he may see proper to 
employ. In regard to the support of the public schoole, 
he stands precisely in the condition of any tax-paying 
citizen, who may have no children to send to those 
schools. He has the same interest in the school fund, 
and, like them, he contributes to the amount raised by 
taxation, according to his ability. Further than this the 
law does not oblige him to go. He is taxed for the sup- 
port of an indispensable public institution, and, if he 
have children to be educated, this institution is open to 
him as to all others, and he is free to avail himself of its 
direct advantages or not, according to his pleasure. 

Now it is to these schools, as we are to suppose, that 
the children of the petitioners are accustomed to resort, 



52 

and in some cases, it is fair to presume, that it is found 
exceedingly inconvenient, perhaps impossible, lor these 
parents to furnish their children with the means of in- 
struction any where else. They are, therefore, obliged 
to resort to these schools, or take the alternative of keep- 
ing their children in utter ignorance ; and it is, under 
these circumstances, that they come before the legisla- 
ture with the complaint, that, on resorting to these 
schools, they find there a practice introduced — that of in- 
dulgingin devotional exercises — which they deem highly 
offensive and objectionable. The grounds of objection 
to this practice, as far as we can gather them from the 
memorial, are two : 

1. That the christian religion is thus supported, or 
aided, at the pubhc expense. 

2. That the rights of equality and the rights of con- 
science are thereby invaded, inasmuch as the unguarded 
minds of their children are thus exposed to be contami- 
nated. 

In regard to the first of these positions, the committee 
would only say, that it is a mere error in fact. It is sim- 
ply untrue. These teachers are paid for teaching, and 
not for praying. No part of their wages is for this ser- 
vice, or any other religious exercise. And this must be 
evident enough from the fact, that the wages of teach- 
ers are not in the least afiected by the consideration 
whether they pray or do not pray. 

In regard to the other ground of objection presented 
by the petitioners, we remark : Whenever a number of 
persons associate together in public assemblage for any 
specific object, it is usual and perfectly competent for 
them to agree on the forms of proceeding, and the terms 



53 

'on which the common object shall be prosecuted. This 
determination of course belongs to the majority ; and it 
belongs essentially to the power of the majority to insist 
on any conventional forms of proceeding while the body 
Is together, not inconsistent with the common object. 
As for example, if it be a company of Friends, or they 
are in the majority, they may agree to sit with their hate 
on ; if not, they may agree to sit with them off. If the 
majority are Shakers, they may dance ; if Jews, o? 
Christians, they may pray. And in all these cases, it is 
the duty of the minority to submit. The only question for 
them is, whether the form or ceremony insisted on is in. 
itself decent and becoming, and not in hostiUty to the 
main purpose of the association. 

Now it is on this principle that your committee sup 
pose the practice objected to by the petitioners is adopted. 
The practice is not prescribed by any state authority. 
It is a matter wholly referred to the decision of the towns 
and districts. A majority of the parents sending chil 
dren to a public school, acting for their children, as they 
have a right to do, may rightfully agree, and direct, thai 
the proper business of the school shall be opened or clos 
ed, or both, daily with religious exercises. Each parent 
has a right to pray himself and to teach his child to pray ; 
and if one has this right, so have all, or as many as are 
of that way of thinking; and as each may practise acts 
of devotion individually, whenever they associate they 
may practise the like acts of devotion in a social way ; 
and they may require the same thing of their children, 
whether individually or in a social assemblage. The 
practice is innocent and decent, and we know of no prin 
ciple on which a minority, voluntarily associating with 
5^ 



64 

them in pursuit of an object in which they are all agreed, 
can properly dictate to the majority the conventional 
terms on which the body shall proceed. 

But the petitioners ask for the passage of a law to 
prohibit the practice complained of. They ask for a law 
to prevent the majority in a school district from ruling 
in a matter which is in itself innocent, and is of neces- 
sity purely conventional. They ask for a law to prevent 
a majority, associated and meeting for the purpose of in- 
struction, from indulging in social prayer and reading 
the bible as a devotional exercise. The argument for 
this application is, that the children of the minority are 
exposed to have their minds tainted and corrupted by 
these religious acts. 

It is undoubtedly true that no person, and no associa- 
tion of persons, is at liberty to indulge in any acts or 
practice, in the face of the community, which, by their 
necessary operation, are calculated to corrupt and debauch 
the youthful or the unwary ; to incite to licentiousness 
or to crime. It is on this principle that the law will not 
tolerate the publication of obscene books and prints. As 
no man has himself a right to rob or steal, so no man 
has a right to incite another person to rob or steal; and 
as no man has himself a right (o trample on the com- 
mon law of public decency, so no man has a right to 
stimulate the passions of others to the commission of the 
like offence. 

If then it were true that the devotional pratice com- 
plained of by the petitioners tended of necessity to the 
contamination of the minds and morals of their children, 
it ought undoubtedly to be arrested by legal interposition. 
Such is not, however, the opinion of your committee 



It is not enough to make out the case, that the petition^ 
«rs differ in opinion with those who resort to this prac- 
tice, in regard to the character and pretensions of the re^ 
ligion which the latter profess. The petitioners have an 
undoubted right to pronounce that religion to be a mere 
superstition, and its whole story a collection of legends 
and absurdities, as they seem to do in this petition; but 
this we apprehend is not enough to make out a case de- 
manding its suppression by legal authority. They must 
go farther, and show that this religion, by its necessary 
operation, is pernicious in its effect on mind and mo- 
rals, tending to set men free from all moral restraint, 
and turn them loosCj with excited and unbridled passion, 
on each other and on society. When this is proved, then 
undoubtedly ought the practice of " praying, singing, 
and reading the Bible," to be prohibited in schools. And 
of course the prohibition must not stop there. If these 
Christian practices are interdicted by law in schools, be- 
cause they contaminate and corrupt the youth who there 
witness them, they must be interdicted elsewheie, and 
every where, within the state, for the same reason. If 
the public reading of the Bible, whether in schools or 
elsewhere, has a necessary tendency to vitiate public 
sentiment, to incite to universal lasciviousness, or in any 
way to weaken and finally destroy all sense of moral 
obligation, then the public reading of the Bible should 
be prohibited by law, not in one place, but in all places; 
and not only so, but it would be the duty of the com- 
munity to put an utter end also to the printing and cir- 
culation of such a bcok. 

The committee cannot suppose that these petitioners 
themselves are ready to carry out the work of prohibit 



56 

lion and exclusion to the extent here indicated ; and for 
ourselves, we should be quite unwilling to begin such an 
experiment in any quarter — at least upon any evidence 
we yet have of the pernicious and dangerous character 
of the book, or the religion, of which the petitioners 
complain. 

But the prayer of these memorialists presents for con- 
sideration another subject of no little moment. They 
ask, that the reading of the Bible in schools sliould be 
prohibited ; and this goes of course to its utter exclu- 
sion — if it may not be read, it cannot be introduced and 
used there for any valuable purpose. Now, your com- 
mittee think that there are very weighty reasons why 
the use of this book should be retained in our public 
.schools, and why it may be, without the least danger 
of offending any one's conscience, or injuring any one's 
rights. We have seen on what ground it is that the 
majority in a public school have a right to read the Bible 
as an act of devotion. We now mean to insist that its 
use as a text or class-book, is, in our judgment, indis- 
pensable to a good system of popular instruction. 

Popular education is a thing very closely connected 
with the healthy existence of civil society, especially in 
the form which such society has assumed with us. — 
Having been at liberty to choose a government for our- 
selves, we have resorted to the republican mode, the first 
principle of which is, that the people are the source of 
all political power. We have all assented to this form 
of government, each individual for himself, and each is 
therefore under contract with all for its preservation. 
The obligations which the adoption of any form of go- 
vernment imposes on the citizens, do not rest alone in 



57 

constitution and laws. Some of the most essential are 
implied in the very nature of the government adopted. 
Such are those which have regard to personal character 
and conduct, and their influence, for good or evil, on 
the stability and permanence of the political forms in 
use. It is universally conceded that popular intelligence 
and popular virtue are indispensable to the existence and 
continuance of such a government as ours ; and if so, 
then as the character of the public will be what the mass 
of individual character is, it is the duty of every indi- 
vidual to be virtuous, and to possess a competent degree 
of intelligence. Every man who has any voice or in- 
fluence in public affairs, is bound to inform himself, and 
to act honestly; for if any one is not, no one is — all are 
at liberty to be both ignorant and dishonest, and when- 
ever that happens, the government, being in the hands 
of the people, and swayed by a majority of voices, must 
become the most oppressive and odious of all tyrannies, 
and hasten to a violent conclusion. The whole power 
of the community rests with the majority, and no mat- 
ter how well defined and strictly guarded, the limits of 
that power may be by the written terms of the compact, 
there are constant and strong temptations to exceed 
those limits ; and the grand security rests, and must al- 
ways rest, after all, in the intelligence of the majority 
to discover the proper boundaries of their power, and 
their sense of moral obligation to keep within them. 
In other words, the question of the existence and con- 
tinuance of a popular government, is always a question 
of the existence and continuance of popular intelligence 
and popular virtue; and hence the necessity and the 



58 

obligation of every member of such a community to be 
educated and to be virtuous. 

But popular education can not be left to take care of 
Itself. It is found absolutely necessary to place it under 
the care and patronage of government. Such is the 
settled policy of our own state. And with what pur- 
pose is it, that the government undertakes to exert its 
poHtical and parental authority over this subject? Not, 
certainly, for the personal benefit merely of the indivi- 
duals who partake of its bounty ; but it is for the sake 
of self-preservation ; it is because these individuals to- 
gether constitute the people, and because the people rule, 
and because without education they are unfit to be rulers. 
The object then simply is, to make these persons intel- 
ligent and virtuous men, that they may be intelligent 
and virtuous citizens ; to fit them, in other words, for 
the faithful and competent discharge of their political, 
social and public duties. 

It is not, therefore, enough that the government shall 
provide, in part or in whole, for the support of education ; 
it is bound, as far as it can, to see that its bounty is so 
applied as to produce the result at which it aims. It is 
quite as important to take care that the proper course of 
studies be prescribed for the public schools, that they 
should be subjected to the proper discipline and the pro- 
per police, as it is that they should be cherished and sus- 
tained at all. And who is to take care of this impor- 
tant matter, if the state does not? The limit of its au- 
thority over the subject is very clear. It is found in the 
object to be accomplished. Keeping that object steadily 
in view, and being careful to prescribe nothing inconsis- 
itent with it, its power is indisputable. 



59 

At present with us this important power of prescrib- 
ing the course of studies in our common schools is lodg- 
ed in hands very near the people. The inhabitants of 
each town elect six officers who are by law the inspec- 
tors and visiters of the schools, determining the qualifi- 
cations of teachers, and directing the course of instruc- 
tion. These officers, of course, represent the majority 
of qualified voters ; that is to say, the majority, through 
their elected officers, do, or may, prescribe the course of 
studies. 

Now your committee do not undertake to say what 
subjects of study should be prescribed. That would be 
foreign to our present duty. But when it is asked that 
a particular book should be excluded from the course by 
law, it is deemed proper to shew, at least, why that 
particular book should be retained, if already in use, or 
brought into use if it is not. 

The great reason may be thus stated. Moral instruc- 
tion is quite as important to the object had in view in 
popular education, as intellectual instruction: it is in- 
dispensable to that object. But to make such instruc- 
tion effective, it should be given according to the best 
code of morals known to the country and the age ; and 
that code, it is universally conceded, is contained in the 
Bible. Hence the Bible, as containing that code, and 
for the sake of teaching and illustrating that code, so 
far from being arbitiarily excluded from our schools, 
ought to be in common use in them. 

Keeping all the w^hile in view the object of popular 
education ; the necessity of fitting the people, by moral 
as well as intellectual discipline, for self-government, no 
QGie can doubt that any system of instruction which 



60 

overlooks the training and informing of the moral fa 
culties must be wretchedly and fatally defective. Crime 
and intellectual cultivation merely, so far from being 
dissociated in history and statistics, are unhappily old 
acquaintances and tried friends. To neglect the moral 
powers in education, is to educate not quite half the 
man. To cultivate the intellect only, is to unhinge 
the mind, and destroy the essential balance of the men- 
tal powers ; it is to light up a recess only the better to 
shew how dark it is. And if this is all that is done in 
popular education, then nothing, literally nothing is 
done towards creating and establishing public virtue, and 
forming a moral people. 

The moral powers then must be informed and culti- 
vated in our schools. Children must be instructed in 
moral truth, and be taught to feel habitually the force 
of moral obligation ; and to do this according to the best 
standard, the use of the Bible for that purpose can not 
be dispensed with. So it is believed the great majority 
of our people think, and wherever they think so in the 
towns, they will, of right, by their proper officers, or- 
der and direct the course of instruction accordingly. 

Nor is it discovered what good right the petitioners, or 
any minority of persons, have to object to the use of 
this book for the purpose indicated, as an approved and 
standard work for instruction in morals, because their 
opinion of its merits in this respect may differ from that 
of the majority. If the minority may rule in regard to 
the use oi this book, and forbid the teaching of its code, 
they may do the same thing in regard to any other book^ 
or any other subject. They may insist that the Chris- 
tian code of morals shall be exchanged for that of the 



61 

Brahmins, or turn the schools over to Plato, or Aristotle, 
or Seneca, or Mahomet. They may prescribe the entire 
course of studies, instead of leaving it to be done by 
those to whom the law, and the voice of the majority, 
have confided the power. 

Nor again, is it discovered that the practice of teach- 
ing morals according to the christian code, and using 
the Bible for that purpose, the majority adopting it, is 
any infringement whatever on the religious rights and 
liberty of any individual. To teach christian morals, 
referring to the Bible both for the principles and for their 
illustration, is a widely different thing from teaching 
what is understood to be the christian religion. Reli- 
gion is a matter between a man and his God. It has 
reference to the worship of the Supreme Being, and the 
mode of such worship, and has relation to a future state 
of existence, and the retributions of that future state ; 
and it is concerned with creeds and articles of faith. 
Now. religious freedom consists in a man's professing 
and enjoying what religious faith he pleases, or in the 
right of rejecting all religions ; and this freedom is in 
no degree invaded when the morals of the Bible are 
taught in public schools. 

And if the christian religion, as a system of faith, 
whether according to one creed or another creed, according 
to the notions of one sect or of another sect, is not taught 
in these schools, then of course there can be no pretence 
that this religion is, in this way, supported by the state. 
Your committee, in common, they believe, with nearly 
the whole body of their fellow citizens, would regard it 
as the deepest of calamities, if religion — the christian re- 
ligion — should fall under the protection and patronage 

6 



62 

of political power. That religion is, in its nature, free ; 
it cannot take support from law, without losing its lus- 
tre and its purity ; it is in its very essence and spirit, to 
demand none but a voluntary worship, and allow none 
but a voluntary support. But we can not discern that 
it is in the least danger of injury from any public sup- 
port in the schools, on account of the use which may be 
made there of the Bible as a text or a class-book. 

Your committee have now given the reason why they 
think the Christian code of morals should be taught in 
our schools, as an indispensable part of our system of 
popular instruction ; and why the Bible should be em- 
ployed for that purpose. There are other reasons why 
it is exceedingly desirable and important that this book 
should be generally used in our schools and seminaries, 
instead of being arbitrarily excluded, as these petitioners 
require. But we do not deem it necessary to detail those 
reasons. If the Bible should be studied for its moral 
principles, it should be studied also as a history, and as 
a classic. As an authentic narrative of events, the most 
extraordinary and the most interesting any where re- 
corded of our raoe, it is invaluable ; and there is nothing, 
and can be nothing, to supply its place. And such is 
the nature and antiquity of its story, that no education 
in this department of knowledge, not the most elemen- 
tary, can be had without some acquaintance with its 
contents. And then as a classic, if generally employed 
as such, it would certainly supply a want which no 
other book can. The faithful and critical study of the 
English language, in its purity, by the youth of our 
country, is immensely important ; and it is confidently 
believed, that no where can there be found, in the same 



63 

compass, half as many specimens of beautiful and pure 
Anglo-Saxon language, as in the Bible. And we think 
it may be safely said that, since the publication of the 
present English Bible, as translated under the orders of 
king James, no writer or speaker in that language, can 
be named, who has acquired any just celebrity for the 
simplicity, strength and beauty of his diction, who has 
not been mainly indebted to that book for his excellence 
in that particular. Mr. Fox declared, that if he wae 
ever eloquent, it was because he had faithfully studied 
the book of Job. 

In conclusion, your committee would only say that, 
while after the most attentive examination, they have 
not been able to find, in the memorial before them, 
one fair ground of complaint, they have been and are, 
deeply impressed with the many and weighty conside- 
rations which urge on all who value the interests o: 
education, the interests of morals, and the interests of 
the country and of mankind, the indispensable neces- 
sity of preserving to the people the right to employ the 
Bible as a means of invaluable secular instruction, in 
all the public schools and seminaries, to which they 
may have occasion to resort. 

Complaints of whatever is valuable in civil society wil! 
always be made. Some who make them are honest, 
but mistaken ; more act under the merest delusion ; a 
few are speculative and reckless. Men of this latter 
class are apt to be ingenious, because restless and dis- 
satisfied. Their work is to destroy, but never build. 
The moral restraints of society sit gallingly upon them. 
They take the name of liberty on their lips, but they 
mean license and confusion. With them nothing is 



64 

sac^-ed, nothing is venerable, and nothing is safe. And 
of late, their boldness and strength seem to have in- 
creased. Their spirit is seen every where. It is busy 
with political institutions, with religious obligations, with 
social forms and domestic ties ; busy to weaken, to inva- 
lidate, and to undermine. They are not supposed to be 
numerous even yet ; but they have followers, who are 
followers because they do not know who they are who 
lead them, or whither they are led. This state of things 
demands undoubtedly great firmness on the part of those 
who would sustain and preserve what is valuable in our 
social and pohtical forms. And it demands as much 
moderation as firmness. "We would always hear ; we 
would always consider ; and we would always reply 
only by argument, and by appeals to reason and to truth. 
It is in this way that the committee have intended to 
meet the complaints of these memorialists; and with 
what success they may have done so, must now be left 
to the judgment of the house and of the country. 

The committee recommend to the house the adoption 
of the following resolution : 

Resolved, That the prayer of the memorialists be not 
granted. 



SPEECH 

On corporations, and the proposition to make cor- 
porators PERSONALLY LIABLE; DELIVERED IN THE 
ASSEMBLY OF NEW-YORK, JAN. 30, 1838. 

[The house in committee of the whole, had under 
consideration an act to incorporate the Cold Spring 
Whaling Company.] 

Mr. Chairman — This is a bill to incorporate a 
whaling company, after precedents now for some time 
established in this state. In regard to the policy of in- 
corporating companies for this particiilar object, I do not, 
for one, feel bound to enter into any special explanation of 
that subject. No sufficient objection to the object hav- 
ing occurred to my mind, and none having been sug- 
gested by others, I am, of course, in favor of the bill. 

But, sir, when we were in committee on this bill some 
days ago, an amendment was offered, the object of which 
was to subject the corporators to personal responsibility 
for the debts of the corporation. On that occasion, I 
made some remarks explaining my objections to such a 
feature, whether in this bill, or any other of a similar 
character ; and I took the opportunity, at the same time, 
to throw out some general reasons why I thought cor- 
porations were entitled to the favorable consideration of 
the house and of the country. 

It is not desirable, sir, to be drawn into the discussion 
6* 



66 

of great principles on a bill of so little public interest as 
this, if it could well be avoided : yet I own that my ob- 
servation and limited experience have led me to think 
it best, as a general thing, to meet and resist error on its 
first appearance, and at the earliest opportunity. The 
propriety of doing so on this occasion is more apparent 
now, from the avowal which was made yesterday, that 
this is a favorite principle in certain quarters, and that 
it is to be insisted on, on every suitable opportunity 
throughout the session. It must then be met, and may 
as well, perhaps, be met and settled now as ever. 

The remarks which I made the other day, very brief 
as they were, have been subjected to some scrutiny, and 
•my positions denied. I deem it necessary to support and 
defend the ground I then took, if I can. 

In the first place, I was then of opinion, and I remain 
of opinion now, that the principle of this amendment is 
inconsistent with the very nature of a private corpora- 
tion, and that it proceeds upon a mistaken notion of 
what a corporation is. I stated then, and though it has 
been denied, I repeat it, that a corporation is a person, 
with the rights and the liabilities of a person. Created 
by law, it is a legal person. It may be the owner of 
property, real and personal, and possess a capital as any 
other person. It has an occupation, and conducts some 
lawful business. It enters into pecuniary and other en- 
gagements, and contracts obligations. The courts are 
open to it ; it summons its adversary before the tribu- 
nals of justice to answer to it, and is itself summoned 
to respond in turn to others. It is amenable to courts, 
having jurisdiction, for the violation of penal enactments, 
and is liable to punishment for its legal offences ; and it 



^7 

is only not answerable for crimes, because in its nature 
it is incapable of committing them. It can not steal, or 
commit forgery, arson, or treason. Individuals may do 
so, and they may or may not be corporators, but corpo- 
rations can not perpetrate such offences. A corporation 
then is a person, a legal being, and as such, and in that 
capacity, it ought to stand, as far as its nature will per- 
mit, on a footing of equality with all other persons be- 
fore the law. 

Now this principle of equal justice is violated, when it 
is proposed to compel a corporation by law, to give secu- 
riiies for the performance of all its pecuniary obligations, 
instead of leaving it, as in the case of all other persons, 
to those who may choose to contract with it, to take its 
individual responsibility, or demand farther security as 
they shall see fit. A corporation has, or should have, a 
fixed and ascertained capital on which it conducts its 
business ; and that is the fund, and the only fund, to 
which those who deal with it are used to look. And 
with proper guards and checks, of which I am at all 
times in favor, there can be no doubt, that the commu- 
nity is quite as safe in its dealings with corporations, 
without this principle of suretyship, as it is in its deahngs 
with natural persons. Beyond this point of equal safe- 
ty, we ought not to attempt to go. 

But this principle of personal responsibility imposed on 
the corporators, considered as it always is, in the light of 
a mere legal compulsion, securing the performance of a 
natural and equitable obligation, is at war with the very 
nature of the subject — as will, I think, be evident enough, 
by considering for a moment the inherent and uncon- 
querable difficulty there is, and always must be, in the 



68 

way of fixing the limit of this personal liability, on any 
just and equitable basis. 

The notion is, that the individuals comprising the 
company, ought in justice and good faith, to be com- 
pelled to perform all their engagements made by or for 
them, since those engagements are supposed to be made 
for the common benefit of all, and therefore for the per- 
sonal benefit of each. Taking this for the principle on 
which the personal liability should be imposed, then it 
becomes necessary to ascertain on whom that liability 
ought to rest ; for if it be imposed on any person who 
has not shared, and could not share, in any benefit or 
advantage, if there was any arising from the supposed 
engagement, great injustice would of course be done. 

The object of such a rule of personal liability as is 
contemplated in the amendment before us, would be to 
hold those corporators responsible who should be such at 
the time of commencing a suit, and this is the usual 
course I believe in such cases. But in the first place, 
we know that the members of corporations aggregate, 
are constantly changing. Every sale of stock is a 
change of corporators. One individual goes out and 
another comes in ; and it might well happen, and I 
dare say some times does, that a few months or days 
even, may be enough in which to complete a change so 
entire that not one person shall be a corporator at the 
end, who was so at the beginning of the period. And 
then it is the practice of corporations to make periodical 
dividends, always, if at all, out of profits, and in such a 
manner as to prevent accumulations. Now what pro- 
bability, I might almost say what chance is there, that 
in a prosecution against corporators, on a contract or en- 



69 

gagement entered into by the corporationj they will be 
found to be such as were corporators when the contract 
was made, or when it was broken, or such as partici- 
pated in any degree, or could have participated, in the 
benefits, if any, arising out of the contract 1 It is evi- 
dent that the persons held responsible, may have become 
members perhaps only one hour before the suit is brought, 
while their predecessors have taken by way of dividend^ 
with others, all the profits and advantage which had 
accrued to the corporation out of the engagement. And 
here, of course, would be a gross injustice, and a total 
failure to fix the liability where it ought to rest, on the 
principle of personal benefit. The same difficulty lies 
in the way of any other rule so far as I know, which 
ever has been, or can be, adopted — as to fix the liability 
on the original corporators only, or on such as should 
be so when the contract or engagement may be made ; 
or those who should be members when the breach should 
occur. 

All these difficulties I think have been felt in Massa- 
<:husetts, where, for some twenty years, commencing I 
believe in 1809, the principle of personal liability for 
corporate debts in the case of the manufacturing corpo- 
rations, was maintained, though with various and re- 
peated changes in the rule. No rule, however, was ever 
found which could make the principle just or equitable 
in its application ; and after persevering until it had dri- 
ven millions of manufacturing capital out of the state, 
the principle itself was finally abandoned, as I under- 
stand, except in cases where there should be a failure to 
pay in the capital. In this state there is, in the general 
law regulating and controlling corporations, a similar 



70 

provision, subjecting members of corporations to personal 
liability when the capital has not been paid in ; and an- 
other provision by w^hich, in case of insolvency, fraud 
is presumed, and personal liability imposed unless that 
presumption is rebutted by proof. Here, I think, is se- 
curity and liability enough, and farther than this I hold 
it is neither reasonable nor right to go. 

But, Mr. Chairman, from the moment when the 
amendment now before the House was offered, I have 
been impressed with the belief that it originated, not so 
much in any apprehension that the community needed 
this sort of supposed protection, as in the fact that, out 
of this House, if not in it, there existed an unworthy 
prejudice against corporations, and every thing bearing 
the name, and a fixed design in some quarters, right or 
wrong, to cripple, and if possible destroy them. Much 
of this feeling in the community is doubtless honest, but 
it is not the less mischievous for that reason, and when- 
ever it is honest, it prevails only because wrong and un- 
just notions are entertained of the true character and 
value of corporations. Believing this, I ventured in a 
few words the other day, to speak of these institutions as 
having been intimately connected in tlreir history with 
the progress of the arts, and with the advance which 
our race had made in civilization, in learning, in refine- 
ment, and in civil liberty. I was aware that such a de- 
claration must have grated harshly on some ears, and, 
as I expected, an attempt has since been made on this 
floor, to deny the position I had assumed. It was sug- 
gested that, while the remark I had made presented a 
remarkable coincidence with one to be found in the 
learned opinion of some learned judge (but which I had 



71 

been so unfortunate as never to have read or seen) I had 
not, like the same learned judge, been careful to dis- 
tinguish between corporations public or political, and cor- 
porations private ; and that while it w^as admitted that 
the former were entitled to some favorable consideration 
in the point of view presented by me, that commenda- 
tion was, to say the least of it, wholly undeserved by 
the latter. 

Sir, I think I understood what I meant to say the 
other day ; I think I said just what I intended to say : 
and I now take upon me to re-affirm the proposition I 
then made, as broadly as it was then uttered, and as it 
was then understood. And so far from admitting, ac- 
cording to the distinction attempted to be drawn, that 
private corporations have had no connexion with, or 
have not in any \vay aided, the progress of civilization, 
learning and liberty, while political corporations have, I 
affirm that the latter, thus acknowledged to have had 
so favorable an influence, probably originated and took 
their rise in private corporations. I speak of this subject 
principally from a general impression, in which, how- 
ever, though my reading on the subject is by no means 
fresh, I think I cannot be mistaken. And I shall 
trouble the committee with a few observations to illus- 
trate my position. 

Under the Roman government, private corporations 
seem to have been first known, though traceable per- 
haps to the Greeks. To authorize associations with 
corporate powers and privileges, the express consent of 
the government was necessary. They were generally 
companies of tradesmen, called in the civil law, colleges 
and universities. Now it is remarkable, that no sooner 



72 

was the commonwealth at an end, and the empire esta- 
blished, than it was discovered by the emperors that 
these associations had been nurseries of faction and dis- 
order — in better language, because truer, they had be- 
come nurseries of liberty, and great numbers of them, of 
such especially as could not protect themselves under 
the prompt exhibition of an express charter, were early 
dissolved. An instance of this jealously is given at a> 
late period, when the emperor Trajan refused to incor 
porate a fire company for Nicomedia, of one hundred 
and fifty men, though recommended by Pliny, after a 
destructive conflagration in that city ; placing his re- 
fusal expressly on the ground that these societies had 
become mischievous to the public peace — in other words, 
they were accustomed more than others, to exhibit symp- 
toms of restlessness under despotic power. These cor- 
porations, especially where there was a number of them 
in the same town or city, it is easy to see, would exer- 
cise a controlling power. Engaged in mechanical or 
commercial employments, and brought into close union 
and sympathy with each other, they were more likely 
to possess property, skill, and mental cultivation than 
most other classes, and to resist oppression or unjust ex- 
actions, they had the constant advantage of a combina- 
tion already formed. To a considerable extent the)'' 
governed themselves under their own by-laws, and by 
means of corporate officers elected by themselves, and 
who stood to them in many things in the place of ma- 
gistrates. 

The first that we know of pohtical corporations as 
8uch, probably originated in this way. These private 
associations became wealthy and influential — at least 



73 

they were substantial and strong ; and they were ena- 
bled, in the progress of events, to command a charter^ 
adding to the corporate privileges which each society se- 
parately possessed, new privileges of a poUtical and mu- 
nicipal character for the benefit of the whole. In 
pursuing her conquests of arms, Rome encountered 
many nations quite in advance of herself in the arts ; 
and her custom was to adopt and found towns, granting 
them political privileges of considerable value : and there 
can be no doubt, that it was in these municipalities that 
the forms of popular election and privilege were pre- 
served, after the empire under which they were esta- 
blished was ended, and that they finally contributed to 
the foundation of liberty in modern Europe, through the 
estabhshment of towns having similar and more ex- 
tended corporate privileges and exemptions. 

When the feudal system of Europe had become, in 
its political effect, not only burdensome but oppressive 
beyond any former example of tyranny, the relief came 
by means of the exercise of corporate rights in cities and 
towns. The inhabitants of these cities and towns were 
for the most part engaged in various trades, sometimes, 
as in Venice and Genoa, in commerce. They had al- 
ready gained comparative w^ealth and importance. They 
existed in associations or societies, each exercising corpo- 
rate rights and privileges, sometimes with, and some- 
times without express authority. It was natural that 
they should gradually slide into the exercise of political 
powers within the narrow sphere of their business ope 
rations. Happily, the condition of Europe at the time 
favored the assumption of such powers. The crusades 
drew off the sovereigns, or at least occupied their atten- 

7 



don ; and while they were impoverishing themselves in 
these enterprises, their subjects, many of them, were 
growing rich and powerful. The commercial cities of 
Italy were among the earliest to avail themselves of this 
state of things, and soon found themselves, partly by 
concession or grant, and partly by actual purchase, in 
possession of independence for all the purposes of local 
government. The example was followed elsewhere; 
in the Low Countries very early, in France, in England, 
and to some extent in Germany. These towns and 
cities at first, as I have said, apparently occupied only 
with trades people and gilds^ grouped into private cor- 
porations, thus steadily acquiring personal importance 
and political power, taking something by grant or favor, 
assuming other rights, and buying of their needy sove- 
reigns still larger privileges, grew at length into repub- 
lics, the more important and interesting as they were 
long the only depositories and nurseries of those liberal 
principles which lie at the foundation of modern liberty. 
It was here that men first gained exemption from some 
of the most odious exactions of feudal tyranny. The 
freeman of the town could dispose of his property by 
deed or will, which no vassal could do ; dying, he might 
choose his own guardian for his children ; he could give 
his daughter in marriage without purchasing the pri- 
vilege; he could prosecute his lawsuit without being 
obliged to resort to the lord's court. The elective and 
representative principles were in vigorous and success- 
ful operation, and the people were trained to an inde- 
pendence and freedom which existed nowhere else. 
Finally, they gained or assumed the right of bearing 
arms, and having surrounded their towns with wallau 



75 

they prepared themselves to offer warlike resistance to 
oppression and injustice, come from whatever quarter 
they might. They went farther in some instances, — as 
in HoUandi-and actually confederated for mutual pro- 
tection and defence, constituting a federal compact, a 
government^ for this single purpose, and placing them- 
selves under federal officers of their own choice. 

The jealousy existing between the sovereigns and the 
great barons, was favorable to the encouragement and 
growth of freedom in the towns. The former were glad 
to interpose these towns between themselves and their 
turbulent and haughty lords ; and it was principally the 
same consideration which induced ihem to favor the 
claims of the agricultural portion of their subjects to en- 
franchisement — claims which, serfs and slaves as they 
were, attached to, and passing with the soil, might have 
slumbered long but for the example of exemption and 
freedom set them by the towns. It was, I think, in the 
fourteenth century that the enfranchisement of this 
whole class was accomplished, or at least attempted, in. 
France, by a general order from the sovereign. 

I have taken this slight historical view for the purpose 
of showing the rise and progress of liberty — democratic 
liberty — in modern times, and for the sake of inferring, 
as I do, that corporations — private corporations, had ori- 
ginally much to do with it. It has been said, and I be- 
lieve with truth, that the first eiyress charters to politi- 
cal or municipal corporations, were given in imitation of 
the licenses to private and commercial companies, and 
as a consequence of the existence of these latter corpo- 
rations. And if entitled to any part of the credit of hav- 
ing given birth to the great principle of local adminis- 



76 

tration under special charters, then we cannot know 
how much more credit they really deserve, until we have 
evidence how wide-spread and how invaluable to freedom 
that principle has become. Look at that principle in its 
application and practice in our own country. We have 
a general government which is a corporation with an 
expiess written charter from the people. Each state go- 
vernment is also a corporation with a similar charter, 
and the whole local administration — the great school 
where demociacy is studied, learned and practised — is 
conducted by means of corporations. Every county, 
every town, every city and every village, and every 
school district is a corporation. Our supervisors, our 
overseers of the poor, and our school commissioners, are 
all corporations. 

But it is not merely the service rendered to liberty by 
their influence in bringing about the establishment of 
political corporations, on which I wish to rest the claims 
of private corporations to general consideration and fa- 
vor. I think their own individual and direct opera- 
tion is to advance mankind in wealth, in morals, in 
refinement, and in freedom — and that on strictly demo- 
cratic principles. This would seem to be inferrible from 
the fact that these instititutions have always prevailed 
most, where we find these principles to have been most 
fully developed, and most strictly acted upon. They are 
not I believe in much use, or held in much estimation 
in Russia, or in Austria. France is only beginning to un- 
derstand their value, while in England they have been 
adopted and used extensively, and with great eflTect and 
advantage. 

it is however in this country alone, that their full im- 



portance has been seen and felt. With us, the great 
point is to elevate the mass of men — the people as a bo- 
dy. One important step towards this object; is to secure 
to every man sacredly, the fruits of his own industry and 
enterprise. But this is only a beginning. Property tends 
to accumulation in a few hands ; and the policy of oth- 
er governments has been to preserve and perpetuate it in 
a few hands. Our policy is a different one: we think 
it important to distribute and equalize it, as far as may 
be without interfering with individual right, and the due 
encouragement of individual exertion. Now for one, I 
confess I know of no instrumentality more efficient for 
both objects, than that of our private corporations for bu- 
siness enterprises. In this way the smallest surplus re- 
turns of individual industry may be securely and profi- 
tably employed. An interest is awakened in subjects 
and modes of human exertion, of which the mass of 
men would otherwise have no knowledge; and they 
come not only to concern themselves with new forms of 
business, but to participate in the profits which arise from 
them. They enjoy not only the fruits of their own per- 
sonal labor, but they share in the returns and advanta- 
ges which flow from the employment of capital and skill. 
No one, indeed, can look at the subject — at least it seems 
so to me — and not perceive how powerful and how fa- 
vorable must be the influence of these associations on the 
habits and character of the people. The number and 
variety of our corporations engaged in the prosecution of 
private business — for they are still private, however pub- 
lic may be the use of them — are very great. Money 
and currency are furnished by them; insurance is effect- 
ed by them; manufacturing and commercial business is 
7* 



78 

conducted by them; they construct turnpikes and bridges, 
and rail-roads and canals. If we look at the great works 
of internal improvement only, in this country, carried 
forward by means of corporations — works which in oth- 
er countries less free and democratic, if prosecuted at all, 
must be either in the hands of wealthy individuals, or- 
become the corrupt and corrupting jobs of the govern- 
ment — we cannot fail to be struck with their immense 
value, as the means by which the most magnificent pro- 
jects and the most splendid enterprises may be conducted 
and realized, not only without danger, but with positive 
advantage to republican habits and republican institu- 
tions. 

But this is not all. We have other private corpora- 
tions in almost every department of social life. In this 
mode it is that Charity and Benevolence make to society 
and humanity their most costly offerings — establishing 
and endowing hospitals, ai^ylums and retreats. In this 
mode it is that Education and Learning are cherished and 
encouraged — with incorporated colleges and academies, 
institutes, historical, scientific and literary societies, mu- 
seums, galleries and libraries, all devoted to this great 
service. And finally, it is in this mode almost exclusive- 
ly, that the public ceremonies of religious worship are 
supported and sustained — a mode by which the nume- 
rous sects into which the religious public is divided, are 
enabled, each for itself, without question or molestation, 
to conduct their own worship according to their own con- 
sciences, and all with entire freedom from any corrupting 
association with government protection or government 
patronage. Let gentlemen look at all these things, and 
then say if they deem it possible that civil society could 



79 

be what it now is, in this age, and in this country, if 
corporations had not existed and did not now exist — so 
moral, so intellectual, so cultivated, so free! 

But, Mr. Chairman, I shall not pursue the subject 
The position which I formerly advanced, and which I 
have now endeavored briefly to illustrate and sustain, is 
not matter of opinion merely; it is rather matter of fact, 
matter of history, of record and of evidence — and if I 
am wrong", gentlemen to whom these views may be un- 
acceptable, will find no difficulty in showing the error 
and setting me right. 

Sir, I have not presented this subject to the commitee 
without an object. I am in favor of well regulated and 
carefully guarded corporations, and I wish to defend them 
against what I am afraid is a growing prejudice — a pre- 
judice which many well-disposed persons, and more that 
are ill-disposed, are careful to feed and inflame. It must 
be well understood by this time, that some of us on this 
floor are of opinion, that there is a destructive spirit abroad 
in this land, which requires to be strictly watched and 
promptly and resolutely opposed, whenever and wherev- 
er it may appear. It is a spirit — bold enough sometimes 
— claiming to understand democracy in its essence and 
purity, better than any body else, and claiming to have 
the courage which others have not, to act always on its 
theoretic doctrines, and carry them out to their conclu- 
sions, lead where they may. It is a spirit which profes- 
ses to watch for the security of the poor and the abject, 
and looks with jealousy and distrust on the thrifty and 
the opulent — a spirit which would be better satisfied with 
nature, if the surface of the earth presented one unbro- 
ken level; if there were no lofty eminences to cast their 



80 

shadows over the humble valleys ; no broad-armed oaks 
rising up to protect, or to shame, the stinted shrubs be- 
side them ; no spots greener than any other spots, none 
richer, none more beautiful ; if all men rose to the same 
height, attained the same weight and dimensions, mov- 
ed in the same sphere, spoke with the same voice, bloom- 
ed with same complexion, and thought or drivelled, as 
the case might be, with the same intellect. It is a spirit 
which wars — I hope for the most part ignorantly — with 
nearly all the valuable institutions of society, in the un- 
founded and ignorant belief, or pretence, that they advance 
mdividual interests at the expense of the mass, widening 
the essential differences already existing in society, and 
tending to aristocratic distinctions, to the oppression of 
the humble, and to the destruction of equahty and liber- 
ty — ignorant and unfounded pretences all. Now, sir, I 
shall not undertake to say that the evident presence of 
that same spirit can be detected here, but so much I wiU 
say, that I do implore gentlemen, in behalf of our com- 
mon and beloved country, to examine well their own po- 
sitions, and take care that they do not, w^hether uncon- 
sciously or by design, so act their parts here as to mi- 
nister to that spirit elsewhere. 



SPEECH 

^N THE ASSEMBLY OF NEW YORK, DELIVERED FEB. 14, 
1838, ON THE RESOLUTIONS INTRODUCED BY MR. HOL- 
LEY RESPECTING THE SUB-TREASURY SCHEME. 

[Mr. HoUey, as chairman of a select committee had pre- 
sented Resolutions, condemning, and protesting against, the 
Sub-Treasury Scheme, and the course of the administration 
at Washington, and that at Albany, in regard to it, which 
were now under consideration in the house. The Resolu- 
tions were designed to be forwarded to the Senators and Re- 
presentatives of the state in Congress, as expressing the sense 
of the Assembly touching the matters embraced in them. 

Mr. Speaker — In considering the present attitude of 
the national government towards the country and the 
people, my mind has been agitated with conflicting 
emotions. I have been alternately filled with indigna- 
tion, and subdued and depressed under a feeling of hu- 
miliation and sorrow. At one time, I have thought that 
I could pour out on the authors of our ruin, prepared 
and preparing, denunciations and curses, the wrath, the 
scorn, the defiance, which becomes the free citizen of a free 
republic, subjected in his person, in his principles, and in 
his country, to insult and oppression. And again, when 
another and a different train of thought and reflection 
has passed through my mind — when I have considered 
who they are who are engaged in this war upon us ; 
how bold, how presuming, how confident they are ; how 



82 

steadily they pursue their object ; the means of corrupt- 
ing influence they possess; their unscrupulous use of 
those means ; their unblushing appeals to whatever can 
inflame the worst passions, or move the meanest pro- 
pensities of mankind ; and when I have thought what 
they have already accomplished in this way^ and been 
forced to compute the probabilities of their future suc- 
cess, in some degree, by their actual successes already 
achieved — ^when I have thought of all these things, I 
confess my heart has sunk within me, and I have found 
it difficult to preserve and maintain that manliness of 
spirit, that enduring hope, that unfaihng confidence in 
the republic, which ought never to desert the bosom of 
the patriotic citizen. 

Sir, it is with feelings such as those I have faintly 
sketched, that I approach the discussion of the subject 
now occupying the attention of the house, and the tone 
and temper of my remarks will of course be influenced, 
more or less, by those feelings. And I have referred to 
this personal matter only for the purpose of affording to 
to those who hear me, if of any consequence either to 
myself oi: others, a way of accounting for any apparent 
want of zeal or spirit in presenting my views. I shall 
not certainly undertake to give security, or assurance, 
before hand, how I ipay be aflfected in the progress of 
my remarks. I can only say, that, at present, I am 
calm. And one thing is settled with me : and that is, 
that passion — I mean honest, virtuous passion, such as 
may come and go and leave no stain — though by no 
means out of place on this subject, can be be attended 
with no advantage, while it might unfit the mind for 
that free and unembarrassed action of all its powers and 



83 

faculties which the occasion so urgently demands, I 
shall endeavor to keep myself collected, and judging 
from the feelings which now oppress me, I think I am 
in little danger of losing my self-possession — perhaps I 
may find it difficult to warm myself up even to a be- 
coming degree of animation and earnestness. 

Sir, the leading measure of the government at this 
time, is embodied in what is called the Sub-Treasury 
Scheme. This is that distinguishing measure which, if 
adopted, will mark the difference between this and all 
preceding administrations. This is that measure on 
which the administration must stand or fall, before the 
country and the world. This is that measure on which 
the country must divide — those who are for it standing 
on the left hand, and those who are against it on the 
right. Those who favor this measure will support the 
administration, and those who are opposed to it will op- 
pose the administration. If the administration is right 
in this, it may well enough be trusted as being likely to 
be right in every thing ; and if wrong in this, then, in 
my judgment, it is so very wrong, that little injustice 
will be done it by supposing that it can hardly be right in 
any thing. If the administration shall succeed in this 
measure as proposed, and if the people can be brought to 
sustain it, then it seems to me (hat it matters very little 
what else it may see fit to do, or not to do. The constitu- 
tion is changed. The government is changed ; and in- 
stead of a republican country and a popular government, 
we shall have an empire, and a despotism. How long our 
republican forms may survive the event, I am not pro- 
phet enough to tell ; but I feel certain that little of the 
essence of republican freedom will be left after it. 



84 

Mr. Speaker, the first reflection which forces itself oo 
my mind as connected with this subject is, that, in order 
to prepare the way for the introduction of this Scheme, 
it was deemed necessary, on the part of the administra- 
tion, to decline and refuse to perform, or attempt to per- 
form, one of the plainest and most indispensable of the 
duties of the government under the constitution. I 
mean that duty, without which the country cannot be 
supplied with a sound and uniform national currency. 

And when I speak of a national currency, I mean 
something different from a local or state currency. I 
mean a currency of general credit and uniform value all 
over the country. I mean a currency which shall be 
worth on the Penobscot, just what it is worth on the 
Mississippi. I mean a currency which, as a medium of 
exchange or payment, shall have the same value at the 
extremes of the Union ; a medium such that a pay- 
ment in Boston in that medium, and another in New- 
Orleans in the same medium of the same nominal 
amount, shall be payments of equal values; a me- 
dium in which funds may be transmitted and debts 
paid, without material loss, between the remotest quar- 
ters of this extended republic. 

Such would be a national currency, and such are the 
uses of a national currency. And such a currency no 
state can furnish, or any number of states, any more 
than individual states can regulate trade between all the 
states, or establish and maintain a post-office for all the 
states. Such a currency can only be furnished by the 
general government ; or if furnished by state banks, can 
only be regulated and have given to it a national cha- 
racter, by some authoritative control and direction of the 



85 

general government. And it is the duty of the govern- 
ment to see that the nation is furnished with such a 
currency. 

It is, of course, no part of my present business to 
show how, by what mode or instrument, the govern- 
ment should perform that duty. The mode in which it 
has furnished a national currency for forty out of the 
forty-nine years of its existence, has been by a national 
bank. A mode in which it has attew/pted^ at times, to 
furnish such a currency, has been by the adoption and 
regulation of state banks. The one has been a success- 
ful mode, the other has been unsuccessful. We know 
it may be done by a national bank ; perhaps it may be 
done by the adoption and use of the state banks. At 
some rate, this duty should be performed, and if it can- 
not be done otherwise than by a national bank, then I 
think such a bank should be created, which I believe 
to be a constitutional instrument, for the purpose. But 
if this duty can be performed without the agency of such 
a bank, then for one I would dispense with such an in- 
stitution : inasmuch as serious doubts and difficulties are 
entertained, to a limited extent indeed, in regard to the 
right of the government to create such a corporation — 
and inasmuch, too, as such an institution always has 
been, and probably always would be, a standing theme 
for declamation and clamor from demagogues and dis- 
honest politicians. 

A proposition is now before the Senate of the United 
States, introduced by a distinguished Senator from Vir- 
ginia, for the adoption, once more, of a limited number 
of state banks for the uses of the general government, 
and as the instruments by which that government shall 

8 



86 

undertake to render that cDnstitutional service to the 
country which is due to it, in regard to the currency. It 
is among the objects of the bill introduced by the Sena- 
tor referred to, to provide, if possible, for such a corres- 
pondence between the adopted banks, situated of course 
in different and distant parts of the country, as may 
give to their respective issues a mutual and extended 
credit, and thus to lit those issues for use as a national 
currency. In regard to this part of the Senator's plan, 
I will say, that if it can be made successhil. if it can be 
made to answer the purpose, and meet the wants of the 
nation, I shall be rejoiced at it ; and as between that 
plan and this Sub-Treasury Scheme, although it embra- 
ces provisions to which I am and believe I always shall 
be strongly opposed, yet as between the two projects, for 
one I say, in the present condition of things, let the 
Virginia plan be tried. 

But, sir, the administration is opposed to this mode, 
and it is opposed to any mode of furnishing or main- 
taining a national currency. And this, as I have said, 
is an abandonment of an essential power and duty of 
the government and the constitution. I shall not go 
into the argument of the constitutional power. That 
argument has been presented elsewhere, and with a de- 
monstration, which I might repeat, but which I could 
not strengthen. 

I may say, however, in general terms, that perhaps 
until the last six months, the power has always been ex- 
ercised, and never doubted. The constitution provides 
expressly for a money of account for the United States. 
The government has the power of coinage, and the 
reffulation of the value of coins. Gold and silver coins 



87 

were to be the standard money of the country, and no- 
thing else was to be made a tender. The legal stand- 
ard of value, the legal medium for the payment of 
debts, was pr3scribed in the constitution, and exclusive 
charge over it was given to the general government. It 
was no part of the business of such an instrument, and 
it did not undertake so far to descend to particulars, as 
to prescribe what should be the actual and practical me- 
dium of exchange in circulation — in what the actual 
and practical currency of the country should consist. 

But the constitution was not wholly silent on this 
subject of the currency. That instrument prohibited 
the issue of bills of credit by the states, and it seems to 
me, by a plain inference, it prohibited the issue of such 
bills under the authority of the states. And what are 
bills of credit? Why, sir, according to my understand- 
ing of them, the}'^ are notes, designed to fulfil the uses 
of mone\', and circulating on the credit of the state, or 
the issuers, be they who they may. They are some- 
thing very different from convertible bank paper — paper 
representing coin — paper the express title to coin — and 
such paper was left free to circulate, and I think it may 
be said that it was contemplated that it should circulate, 
and become, as inevitably it must, and legally might 
become, the actual currency of the country. At the 
date of the constitution, there were existing and in ac- 
tual operation in the country, three state banks — three 
banks issuing convertible paper to circulate as money, 
and actually, to the extent of the issuer, taking the 
place of coin in the channels of circulation ; and no- 
thing seems to have been further from the thoughts of 
the framers of the constitution, than to interfere injuria 



88 

^Trtsiy with these banks, or with their issues. The use 
and necessity of convertible bank paper for currency in- 
stead of coin was as well understood at that time, as it 
is now. And it seems to me, that to suppose, as some 
do, that, in the face of facts like these referred to, power 
was given to the general government to create a stand- 
ard money for the country in the shape of coins, and 
tliat it was designed at the same time to withhold from 
that government the power to regulate and control that 
which might legally, and would of necessity, take its 
place in circulation as its representative, is to charge on 
the framers of the constitution a want of common in- 
telligence and sagacity in no degree merited. 

Sir, it was expressly m.ade the duty of the general go- 
vernment to regulate trade between the states. Now it 
was very well understood, I suppose, at that day^. and has 
always since been well understood — at least until within 
a very recent period — that internal trade could not be car- 
ried on without a currency. Barter may be ; but com- 
mercial trade cannot, any more than transportation can 
be carried on without highways by land or water; with- 
out an ocean, without rivers, canals, roads or railways, 
or without ships, boats, wagons or cars. A currency is 
not merely convenient to trade, or even essential to it as 
an incident to a principal; it is, as has been elsewhere 
said, a part of it, as much a part of it as a steam en- 
gine is part of a steam-boat; and we might as well ex- 
pect such a boat fitted for propulsion in that and no 
other way. to move off at command without her engine, 
as to expect the internal trade of a country to move for- 
ward without a currency ; and to suppose that at the 
date of the constitution, it was expected that the inter 



nal trade of such a counfry as this was to be carried on 
and conducted with coin, with gold and silver only, i?, 
I think, to suppose an absurdity. 

I think it was understood and anticipated that com- 
mercial business did and would require a commercial 
currency, to consist of convertible paper, and that the 
new government would hav^e a duty to perforn in regard 
to that currenc}^, without which it could not discharge 
its express constitutional obligations of regulating the 
commerce. It was one of the principal objects, leading 
to the formation of the government, to give to the com- 
merce of the country a national character, and that it 
could never have, without a currency having the like 
character. 

The domestic trade of this country, in amount and 
value, is very great. It is vastly more important and 
extensive than the foreign trade. The commerce of the 
coast and navigable rivers alone, is greater than the fo- 
reign commerce. The tonnage employed in the coast- 
ing trade and fisheries, exceeds that employed in the fo- 
reign trade, and the vessels thus employed make from 
three to twenty voyages in a year. And then we have 
to add to this, all that amount of trade, not easily calcu- 
lated, between the terminating points of sloop and steam- 
boat navigation on the coast and rivers, and the vast 
and wide-spread interior. Now the interests of this im- 
mense trade are placed by the constitution under the care 
and regulation of the general government, and, with it, 
is imposed on that government the duty of providing or 
maintaining a fit and proper currency for the conducting 
and carrying on of that trade, and without which the 
trade cannot be said to be regulated and taken care of 

8* 



90 

A state currency, a local currency, however peifect in 
itself, is utterly insufficient and incompetent for this pur- 
pose. 

The states do furnish currencies ; not one but many; 
not one but twenty-six currencies. And without the di- 
rect and authoritative interference of the general govern- 
ment, no such thing as a national currency ever has 
existed, or ever can exist. If the states separately can 
so far regulate domestic trade as to provide for it a gene- 
ral and uniform currency, they can do various other 
things for all the states just as well. They can about 
as well regulate foreign commerce, as internal commerce. 
They may coin money and regulate the value of coins. 
They may establish post-offices and post-roads ; they 
may declare war; raise and support armies; provide 
and maintain a navy ; lay and collect taxes. If the 
idea is that the states can mutually agree in regard to 
commerce and the currency, they can mutually agree 
also in regard to other objects confided to the general go- 
vernment — a notion at war with abundant ante-consti- 
tutional experience, and having no other foundation 
than that, as far as the interests of the country are con- 
cerned, we can do very well without a general govern- 
ment, and that the only good reason why it should be 
preserved is, that the interest and benefit of the govern- 
ment itself, or of the government officials, require it. 
And this notion seems to accoid with the opinions of the 
president. He thinks that the people expect too much 
from government. The whole spirit and burthen of his 
message to congress at the special session was, that it is 
enough for the government, if it takes care of itself. 

Now it is that most important constitutional duty in 



91 

regard to the commerce and currency of the country, 
which I have referred to, which the administration has 
seen fit to repudiate and renounce. Tlie administra- 
tion denies that any such duty belongs to it, and it re- 
fuses, in the most decided terms, to perform any such 
duty. In his special message to congress, Mr. Van 
Buren expressed himself on this subject, not indeed very 
plainly, but yet, when examined, unequivocally. 

" If therefore," said he, '■ I refrain from suggesting to 
congress any specific plan for regulating the exchanges 
of the country: relieving mercantile embarrassments; 
or interfering with the ordinary operations of foreign or 
domestic commerce ; it is from a conviction that such 
measures are not within the constitutional province of 
the general government." 

And such is the beginning of this extraordinary 
movement on the part of (he administration. It begins 
with a distinct and explicit, disavowal of any obligation 
to perform what has always been admitted to be an essen- 
tial constitutional duty. It abandons a principal power 
of the government: and that power one which, if ex- 
ercised at all, must be exercised for the benefit of the 
whole country ; and this it does for the sake of using 
another power for its own especial benefit. It is the be- 
ginning of a system by which, if followed out, the plain 
and necessary powers of the general government, grant- 
ed as all its powers were, wiih a scrupulous reference to 
the interests of the country, may be given up and dis- 
carded — giving place to other powers so construed, and 
so used, as to make their exercise result in almost ex- 
chisive advantage to the government. 

But, Mr. Speaker, 1 turn now to consider what this 



92 

Sub-Treasury Scheme is which the adminisfration pro- 
poses to adopt, and to which it has thought it necessary 
to sacrifice preliminarily an essential constitutional power 
of the government. 

In practice, from the earliest time, except from the 
necessity of the case, the government, and no officer of 
the government, has been allowed to have the actual 
possession and keeping of large sums of public money. 
We have had a treasury ; and in common language we 
are often said to have money in the treasury — sometimes 
very large amounts. But strictly, there has been more 
fiction about this than fact. Congress, or the proper 
functionaries acting for congress, have managed the 
public money just as all considerable private dealers 
have managed their money. It has been deposited ; 
that is to say, it has been changed from cash in hand 
into mere credits — cash credits which may be com- 
manded for use at pleasure— but still credits, and not 
money. Even when, under the far famed Specie Circu- 
lar, the government w^as in the receipt of millions of gold 
and silver, I suppose it was generally without a dollar 
of specie on hand in the treasury, or elsewhere. The 
money was deposited in banks as fast as received, and 
thus became the property of the banks, and the govern- 
ment had, in exchange, credits, but not cash. And the 
same thing was true when there was said to have been 
a large surplus in the treasury. 

'' The government went into operation in 1789, and in 
February, 1791, the first bank of the United States was 
established, and becauie the depository of the duty bonds 
and public money of the country. When the charier of 
that bank expired in 1811, twenty-one state and district 



93 

banks were adopted as depositories. In 1816, the late 
bank of the United States was chartered, and became, 
and continued to be, the depository of public moneys 
until 1833 ; when the state banks were again adopted 
and used for this purpose, and continued to be so used 
ur>til May last, when they suspended payments in specie. 

On the happening of this latter event, the mode of 
keeping the public money was changed ; the Sub-Trea- 
sury Scheme was begun. The revenue was directed to 
be collected, kept, and disbursed in gold and silver. Of 
this practice and policy, as attempted to be justified by 
the circumstances of the case, I have only to say, that 
it was not according to precedent. In the fall of 1814, 
there was a suspension of specie payments by the banks 
south of New-England ; and from that time till the bank 
of the United States was chartered in 1816, the revenues 
of the Union, south of New-England, consisted wholly 
of treasury notes, and deposites in non-specie paying 
banks. The government at that time submitted to the 
same law of necessity in business which was the law of 
the whole country. And that was a republican govern- 
ment, and a republican administration — but the times 
are changed. 

It is now proposed, by the administration, to establish 
the Sub-Treasury plan on a permanent footing, and as a 
permanent policy. The former, long tried and well un- 
derstood method of making deposites — exchanging cash 
for cash credits — is to be abandoned ; arid instead of 
that we are to have that other system — the favorite sys- 
tem of two classes, and of two classes only, I believe, in 
any business and commercial community — I mean mi- 
sers and despots. The government is now to set up for 



94 

a grand proprietor, a wealthy dealer in money — in gold 
and silver — trusting nobody but its own dependents and 
creatures ; having a train of treasuries, with their vaults, 
safes, bolts, and massive keys — the centre being at Wash- 
ington, and ten thousand dependencies linked to it, and 
scattered throughout the length and breadth of the land. 

Now if not only the framing of the law for the esta- 
blishment of this scheme, but the ultimate control over 
the whole operation and execution of it, v/as in the hands 
of congress ; if no otlier hands than such as congress 
might designate and control, such as should be responsi- 
ble to congress alone and not to the president, could have 
the handling of the money; still I should think it a 
scheme fraught with danger to the constitution and the 
country. I should think that government, under its 
necessary operation, could not fail to become corrupt and 
despotic. I should think that the people instead of be- 
ing masters would have masters; money masters, and 
those the worst of masters and tyrants, such as the pos- 
session and handling of money are apt to make. I 
should be of opinion that the treasures of the nation 
would be unsafe, for I should have no confidence in 
bonds and sureties — in this lock-up and turnkey system. 
I should expect to see public defaulters multiplied. I 
should expect to see embezzlements, robbery, arson, mur- 
der, become the order of the day, and of the night. I 
shouLl expect to see our penitentiaries crowded with more 
numerous inmates, the gallows trod by a more nume- 
rous tenantry, and the whole land filled with violence 
and outrage. 

Looking at this scheme in the most tavorable light, 
I see in it nothing belter than a cold-hearted, selfish po- 



95 

licy, productive of no good to any body, but the govern- 
ment or its retainers, and in the present slate of things 
likely to end in universal distress and ruin. 

I see in it a hostile spirit towards the state institutions 
in their present perilous condition, towards those im- 
portant agencies established and employed in all the 
states in aid of commerce and the currency ; or rather 
I see in it a war of extermination on commerce and the 
currency, and therefore a war on the interest and the 
business of every man, rich or poor, in this widely ex- 
tended country. 

I see in it the means of now bringing in that hard- 
money policy, not for the government only, but for the 
whole country, which we know to have been heretofore 
the favorite policy of some who were high in power ; a 
policy which they aimed to estaljlish, first of all, through 
the agency and support of a party in this country which 
was low in knowledge and lower still in principle — a 
policy now, however, which, if it can once be fastened 
on the people for a time, is then to be thrown off, at 
least, for the government itself and its favorites, and for 
which abundant provision is made in the details of the 
plan, looking to paper issues by the government, and 
the free use of drafts, checks and certificates of depo- 
sites circulating between the various branches and strong- 
holds of the treasury. 

I see in it a settled purpose to separate the government 
from the people; to erect the government into something 
apart from and independent of the people; something 
which shall have a separate and independent existence, 
and become a property for the use and enjoyment of 
those who may be in possession of power and the oflSces; 



96 

and something moreover, which may be perpetuated and 
transmitted, under the influence and patronage which 
their new position will give, in just such a line of de- 
scent and inheritance as the interest or affection of the 
proprietors for the time being, may prompt them to ap- 
point. 

But, Mr. Speaker, there is another, and to my mind 
a more serious and alarming view of this subject; and 
if we would understand the full import of this Scheme; 
we must go back a little, and inquire into certain consti- 
tutional doctrines of the administration, having a most 
important and ominous relation to it. And I do not he- 
sitate to affirm that, taken in connection with the doc- 
trines referred to, this Scheme, if adopted, must complete- 
ly change the relation in which the government stands 
to the people and the country. We shall have a new 
government, such as the constitution never contemplat- 
ed, and such as cannot consist with liberty. 

Sir, that government of ours, which was created and 
put in operation in 1789, was an agency adopted by the 
people of the United States for their own purposes; — a 
corporation, to which form, body and faculties were giv- 
en, by written charter, to enable it, and for the sole pur- 
pose of enabling it, to render certain services to the coun- 
try, with a view to the common good. Such is an Ame- 
rican constitutional government; and thus is an Ameri- 
can constitutional government distinguished from all 
preceding governments, and from all cotemporaneous 
governments in other parts of the world. It has been 
the principal achievement of our time and country, that 
we have demonstrated the practicability of framing a 
jgovernment with all adequate powers ; and yet so con- 



97 

stituted, by means of a skilful partition and limitation 
of those powers, that the government cannot use its pow- 
ers to separate itself in interest from the people, and 
erect itself into a condition of independence. The great 
vice of governments before us, had been that, whatever 
form they might assume, they had in effect a separate 
and independent existence, above the people rather than 
of the people; having interests and possessing objects 
other than those of the people, different from and anta- 
gonist to them. 

This vice was supposed to have been excluded, and 
effectually guarded against, in our system. The point 
of greatest difficulty undoubtedly was to manage the exe- 
cutive department of the government. It was necessary 
to create a head, or chief, of this department ; and it 
was necessary to clothe this functionary with large au- 
thority, and even with considerable discretionary power. 
And universal experience had shown that where much 
power is given, more is usually coveted ; that executive 
power especially is full of charms ; that the executive 
office is prone to set up for independence, and draw away 
after it other powers and other functionaries, and finally 
to separate itself from the constituency, and become a 
power and a property apart from the people and above 
the people. The great problem, of course, was how to 
make the executive effective, and yet escape this danger; 
and that problem was supposed to have been solved, and 
for the first time, in our American constitutions ; and it 
was supposed to have been solved also, and for the first 
time, in the case of a great and widely extended nation, 
when the constitution of the United States was framed. 

The constitution gave to the president the power of 
9 



98 

nomination to the principal offices. It gave him, not 
indeed any part of the power of legislation, but the right 
to arrest legislation by a voice equal to that of two-thirds 
in number of those comprising the legislative depart- 
ment. It made it his business to take care that the laws 
be executed ; and it gave him the command of the 
army and the navy — only making him subject to an- 
swer, by impeachment, for any abuse of his authority. 
Of course it did not entrust him with any portion of the 
legislative or judicial power, and it was at great pains to 
limit and define very exactly, the extent of his execu- 
tive authority. There was one power, in particular, 
and above all others, with which I think it is manifest^ 
it was intended the president should never intermeddle, 
neither in whole nor in part — a power with which he 
should have no concern, and over which he should have 
tio control. I shall be understood of course to refer to 
the money power — the most delicate, the most dangerous 
of all political power confided to human hands. 

In regard to the revenues of the country, there are 
several trusts which must be confided to somebody. In 
the first place, the revenue must be raised, then it must 
be received, kept and managed till wanted for use ; and 
finally it must be disbursed. Now I hold it to be of the 
very essence of our system, that neither of these trusts, 
nor any part of either of them, should be confided to 
the president. The first trust — that of raising the reve- 
nue — belongs to the legislature. This is conceded by 
every body; and so does the last trust — that of disburse- 
ment — so far as the purposes and objects to which the 
money is to be applied, are concerned. But that inter- 
mediate trust — the duty of receiving, keeping and ma- 



99 

naging the revenue, together with that of paying it out 
according to legislative direction — how are these duties 
to be executed? They are, in their nature, executive 
duties. There is something to be done and performed 
in obedience to order and authority. Have these duties 
been confided to the head of the executive departments 
— to the president? Far from it. This would liave 
been to go back to former systems, and place tlie power 
where it would be sure to be abused. This would have 
been to adopt a distinguisliing and markea feature of a 
monarchy, or an autocracy. No: This power was 
placed in far other hands. 

If we look into the constitution, and turn to the cvti- 
meraied powers of the president, we find not the slight- 
est intimation that any portion of this power was to be 
confided to him. On the contrary, we shall find, oo 
examination, that it was entrusted wholly to Congress. 
The very first enumerated power of Congress is the 
power, not only to lay taxes, but to collect taxes, and 
to 'pay debts. And congress also has power to borroio 
monei/j to support as well as raise armies, and to ^nain- 
tain as well as provide a navy. And to congress is given 
in express terms, the power of disposition over "the ter- 
ritory or other properly belonging to the United States.'^ 

When the government came to be organized under 
the constitution, a treasury department w^as created, and 
that department was arranged in strict conformity with 
the frame of the constitution — an independant depart- 
ment, independant I mean of the president, and insli^ 
tuted for the express purpose of receiving and manag- 
ing the revenue : and made, in the act, responsible di- 
rectly, not to the president, but to congress to whom it 



100 

was to report. I conclude that congress, and congress 
alone, according to the constitution and the law, has 
the ultimate superintending and directing power over 
the treasures of the nation, and those who may have 
the immediate charge of them. 

Sir, it would be extraordinary if it had been other- 
wise. When the constitution of the United States was 
framed, the American people had had some experience in 
government on their own peculiar plan. And surely, 
they had known no other principle and no other prac- 
tice in regard to this important money power, than such 
as I suppose to have been adopted in the frame of the 
general government. Never, I believe, in a single in- 
stance, had the people in any state confided this power 
to the executive. I have looked into the constitutions 
of the old thirteen^ and it is evident enough from the 
care with which, in all these states, the appointment of 
the treasurers has been reserved either to the people, or 
to the immediate representatives of the people, that the 
danger of entrusting any part of this power to the exe- 
cutive was well understood. It is believed to be the in- 
variable and universal practice in the states, that the le- 
gislature is the body to which all the fiscal agents and 
oflficers respond, and which has the undisputed control 
of the public purse, or at least of those who are appoint- 
ed to take charge of it. 

Sir, this seems to me to be one of the most prominent 
among those peculiar features of our system which have 
made it what it is, a free and republican system — a con- 
stitutional and American system. In that country which 
had made the greatest advance in freedom before our 
time, the people had early learned the importance of re- 



101 

serving to themselvesj or their representatives, the mo- 
ney power. But they regarded the subject cliiefly in a 
single point of view. Their doctrine was that if reve- 
nue was to be laised, the people must tax themselves 
by their representatives in parliament : for otherwise no 
man's property was his own. It was the king's ; for if 
the king could take a part without consent, he could 
take the whole. And a people who had nothing they 
could call their own were slaves. Hence it was settled 
that the king could have no revenue, except from per- 
sonal or royal possessions, unless by grant from the 
commons. The commons, therefore, were accustomed 
to g-ive and grant a revenue to the king. And, un- 
doubtedly, this right of withholding revenue from the 
king was a most important and indispensable check on 
the sovereign. But all this was very far from establish- 
ing what we call constitutional liberty, or reducing go- 
vernment to what we understand to be a free constitu- 
tional government. For still government was a thing 
apart from and above the people ; a thing in which the 
sovereign had a personal and paramount interest and 
property. It w^as his government— his freehold — to be 
held and enjoyed by him as such ; with a conceded ob- 
ligation, indeed, so to conduct and manage its affairs as 
to give protection and security to the subject, and pro- 
mote the common good, provided only these objects 
could be attained without any serious interruption to the 
enjoyment of his own rights, privileges and immuni- 
ties, as the undisputed property of government. This 
was and is the English system ; and how much better 
than most other European systems I need not stop to 
say. 

9* 



102 

But this is not our system. We give and grant mo- 
ney to nobody ; neither to the president, nor to the se- 
cretary of the treasury, nor to any body else. We, by 
our representatives, raise money for our own purposes ; 
we direct the application of it to such objects as Ave 
please, and keep the management of it under our own 
control, or the control of our representatives, until we 
cause it to be paid out where it is due. This is our 
system ; and unless that system be preserved, in every 
feature of it, we have no longer such a government as 
that with which we set out. 

Now while such is our system ; while such is the 
doctrine of the law and the constitution on this subject, 
let us see what are the doctrines of the administration 
on the same subject. 

. In April, 1834, the late president of the United States 
sent to the senate his Protest, in which he took occasion 
to set forth, very fully his notions in regard to the powers 
and duties of the presidential office. It will be remem- 
bered, that shortly before this time, the public moneys 
were held in deposite by the bank of the United States, 
where they had been placed by law. The president 
had intimated a desire for their removal to the state 
banks. The subject was considered in the house of 
representatives, on an intimation that the money was 
unsafe in the hands of the bank, and that house came 
to the resolution that the money was entirely safe, and 
no cause existed for the removal. Shortly after the ad- 
journment of congress, the president came to the deci- 
sion that the bank of the United States should no longer 
have the keeping of the deposites, and he required the 
secretary of the treasury, under whose control the law 



103 

had placed them, to remove them. Mr. Dnane, then 
secretary, refused to comply with this order. The pre- 
sident removed him from his office for this sole cause ; 
and appointed another individual to that office, v^^ho 
came in with the understanding that he would obey the 
will of the executive. The new secretary then prompt- 
ly removed the depositee, and placed them where he was 
directed to place them — in certain selected state banks. 
When congress came together the next session, the se- 
nate passed a resolution condemnatory of the conduct of 
the president, and it was on the occasion of that resolution 
that he sent his Protest. And now let us look at some 
of the positions of that extraordinary document. 

[Mr. Barnard here read several paragraphs from the 
Protest, and then proceeded.] 

Mr. Speaker, I had occasion, when this celebrated 
state paper was received, to draw up, which 1 did with 
considerable care, an abstract of the constitutional doc- 
trines contained in it ; and as the house will now be 
well able to judge of the accuracy of the abstract, I will 
take the liberty of reading such portions of it, as may 
be applicable to the business in hand. 

DOCTRINES CONTAINED IN THE PROTEST. 

" That the whole executive power of the government, 
and every part and fraction of it, is vested in the presi- 
dent, and that he alone is responsible for its exercise, 
whether the power be exercised by himself in person, or 
by any other functionary." 

" That all the duties imposed by law on any execu- 
tive officer, from * the highest officer of state' down ^ to 
the lowest subordinate,' are duties imposed on the pre- 



104 

sident, and therefore he has a right to the absolute 
* control' of every such officer." 

"That every officer in the government, deriving his 
appointment through the president, or any officer under 
him, (except judges only) holds his office by the tenure 
of his loill^ and is removable by him according to his 
pleasiire.^^ 

"That all the officers of the government, in every 
department of it, having any executive duty to perform, 
are merely the president's 'agents' and 'instruments,' 
chosen to aid him in the performance oi his duties, and 
as such they are responsible to him." 

" That the sole and exclusive custody of the public 
money belongs to the president, not so much that it is 
given to him by the constitution : but because it is * an 
appropriate function,' or prerogative, of his office ; and 
that congress can pass no law which would take the 
treasures of the country out of his hands." 

Such are the positions and doctrines of the Protest; 
and as they were the doctrines of the laet, so of course 
they are doctrines of the present administration. Mr. 
Van Buren came into office not only as the approved 
successor of G^n. Jackson, but he came in with a so- 
lemn promise to follow in the footsteps of his predecessor. 
Such then are the doctrines of the president, and the 
settled and approved doctrines of those who support and 
sustain him. 

Let it be remembered, then, that, when the consent 
of congress shall once be obtained to the Sub-Treasury 
Scheme — to the plan of having the public money kept 
in hand, instead of being deposited as heretofore — from 
that hour, the president of the United States will have 



106 

the custody of it. With more heads and hands than 
Briareus, and with this singular advantage over that 
monster, that his heads and hands occupy various and 
distant quarters at the same time, he v^^ill be present eve- 
ry where, to clutch, and count, and hoard every dollar 
of collection wherever received through the vast territo- 
ries of this Union. Every officer, and every depository, 
from the secretary of the treasury to the humblest post- 
master, is his agent and instrument^ dependent on his 
will, responsible to him and to him only, and existing 
merely to aid him in the performance of his duty. 

Congress may declare who shall keep the public mo- 
ney, and where it shall be kept ; but still, congress can- 
not take it out of his hands. He will still be the keeper, 
and the appointed place of keeping will be his place of 
keeping. Congress may create a principal treasury at 
Washington : the president will be there. It may con- 
vert the mint at Philadelphia and its branches elsewhere 
into treasuries, and the president will be there. It may 
make treasuries of the custom-houses at New- York and 
Boston, and the president will be there. It may esta- 
blish treasuries at Charleston or St. Louis, and the pre- 
sident will be there. It may erect a treasury in every 
city, town, village and hamlet in the land, and wherever 
the treasures of the country are, there will the president 
be also. 

If there be an individual on this floor, or in this com- 
munity, who can contemplate this state of things, with- 
out feeling that the condition of the country is changed, 
and that the cause of the Constitution is in danger, then 
I can only say that, that man's republican sensibilities 
are strangely blunted. To see the president about to be 



106 

exalted to be a potentate of almost unrivalled power — to 
see him sit as a great money king over the nation — to 
see him invested with legal ubiquity, confined to no place, 
but present every where — commanding an army of 
retainers and slaves, created to do his will and perform 
his pleasure — attaching them to his person, and to his 
blazing car, by chains of gold and silver, never dimmed 
or fretted with rust, and so ductile that they may be 
drawn out to any required length, to extend to and em- 
brace any possible increase in the numbers of those who 
may be called in to widen and swell the mighty and 
ominous circle — to see all this, and yet see nothing 
wrong, to feel no alarm, to find every thing republican^ 
every thing democratic, every thing safe — to see all this 
and remain unmoved and unconcerned — others may if 
they will and can — I cannot. 

Sir, the forms of government, the lifeless body of go- 
vernment, is nothing when the spirit is gone. The sub- 
stance of the Roman constitution did not survive the 
battle of Pharsalia. but the forms of the Roman consti- 
tution were not yet overthrown. And Caesar, in full 
possession of the public treasures, and in the enjoyment 
of actual and undisputed soveieignty, "bestriding the 
narrow world like a Colossus," still contented himself 
with the consulship; and to the last he refused to as- 
sume the diadem or the title of king — but the Roman 
republic was not the less at an end for that reason. 

Mr. Sfjeaker — After what has fallen from me already, 
I need hardly add that I am in favor of the resolutions 
on your table. I desire to see them passed, as promptly 
as may be, and sent to the Senate of the United States, 
where, it is possible, that the principal actor, engaged in 



107 

prepaiing to bring out this tragic plot before the peoplCj 
may feel bound, for the sake of consistency, if not of 
principle, to forbear any longer to give this nefarious 
project his support. At all events, we shall do our duty 
by adopting the resolutions. 

And if, after all, when we and others, here, and else- 
where, have done all in our power to do, to arrest the 
administration in its mad, preposterous, and destructive 
career — if still it shall persist in its course ; and then, if 
the people shall sustain the administration, as its friends 
confidently predict they will ; if the American people, as 
I am not prepared to believe, shall consent to put on the 
fetters forged and forging for them, because wrought of 
gold and silver ; if that great Luminary, the source of 
light and warmth to us, and of hope to the political 
world, must now be darkened in the heavens ; if we 
must have, not indeed a brazen, but yet a metallic sky 
over our heads, from which no dews can descend to re- 
fresh, and no showers to fertilize ; if we must inhabit a 
parched earth, and grope in settled gloom, and stumble 
on each other, without affection, without charity, with- 
out kindness, without confidence; if anarchy, if chaos, 
if confusion must come again ; if we must meet disas- 
ter, and ruin, and conflict, and blood — why let the evil 
day come ; and let it be our consolation that we labored 
to avert and avoid it, in of!ice and out of ofBce, in sea- 
son and out of season, knowing no rett and no plea- 
sures, so if by any possibility we might contribute to 
save and redeem our beloved country. 



REPORT 

On the subject and system of public instruction, 
in the state of newyork, made in assembly, 

MARCH 7, 1838. 

Mr. Barnard, from the committee on colleges, acade- 
mies and common schools, to whom were referred so 
much of the Message of his Excellency the Governorj 
as relates to Pubhc Instruction ; the report of the Super- 
intendent of common schools ; and sundry Petitions from 
colleges and academies, for aid ; and from inhabitants 
of various parts of this state, in regard to common 
schools, and the diffusion of Knowledge among the peo- 
ple, 

REPORTS : 

The committee feel the full weight of the high duty 
imposed upon them. The most valuable interests of a 
great! people, personal and political, for the present time, 
and for the future, are undoubtedly, in some degree, in 
their hands. At all times, the educational system of the 
state is a matter of deep and paramount importance; 
and on those who have charge of it, and on those who 
have any authoritative influence over it, must always 
rest a deep and lasting responsibility. But, at this time, 
the whole subject comes to us invested with new interest. 
The state is now possessed, and to be possessed, of new 
and ample means, in the income of a large fund, depo- 

10 



110 

eited with it by the government of the United States ; 
and, it seems to be generally conceded, that these means 
ehall be devoted exdusively to the purposes of educa- 
tion. The available fund, already deposited, amounts 
to nearly four millions of dollars ; and to this, will short- 
ly be added a million and a third more, if the law of 
congress, as it now stands, shall be executed. With the 
income, arising from so liberal a fund, thrown on the 
hands of the state, and which is regarded, by common 
consent, as a new and perpetual endowment for our sys- 
tem of public instruction, a new and most responsible 
duty arises. An additional sum, already equal to twice 
the amount of that now commanded by the state, for 
the same purpose, is to be annually applied to the ad- 
vancement of education, the spread of knowledge among 
the people, the forming of the popular character, and the 
preparing and perfecting of that broad basis of intelli- 
gence and virtue, on which alone can rest our republi- 
can forms, and the security and happiness of a great 
and growing community. 

Your committee feel that, under these circumstances, 
it would be inexcusable in them, and in this legislature, 
not to review, and, perhaps, revise the whole plan of pub- 
lic instruction in this stale. From this time, the state 
must be regarded as starting from a new point, as set- 
ting out in a new career, in regard to a matter of the 
first consequence ; and it cannot fail to depend very 
much on the manner in which this important trust shall 
be performed, whether we are to be a peaceful, prosper- 
ous, free and happy people, or a people, sunk, at no dis- 
tant day, in misery — splendid misery it may be — broken 
into furious and contending factions, and passing through 



Ill 

every form of vice, and every form of violence, first into 
anarchy, and then under the iron hand of an oppressive, 
and, perhaps, bloody despotism. 

The part which seems to be assigned to your commit- 
tee in this work ; that of examining (he plan of public 
instruction, as it now exists, pointing out its defects, and 
devising and preparing for the action of the assembly, 
such material changes and alterations in ihe system, and 
such new measures, as we may deem essential to the 
proper progress and advancement of this great interest ; 
this delicate and responsible service, has occupied much 
painful thought with us, much severe study and pa- 
tient investigation. We submit the conclusions at which 
we have arrived, to the house, certainly with a sincere 
conviction that, in the main, they are right, and with an 
earnest hope that, if they shall meet with the favorable 
judgment of the legislature, they may be proved to be 
just by the practical working, the salutary and happy 
influence of the measures which mny be adopted, as the 
result of these conclusions. At the same time, we may 
be allowed to say, that though we do not shrink from 
the responsibility of taking decided, perhaps, bol<l ground, 
yet this confidence is not wholly our own; inasnuich, 
as we know that nothing that we may recommend can 
be adopted, until it shall have passed the patient scrutiny 
of both houses of the legislature, and met the sanction 
of their dehberate and united wisdom. 

It has seemed desirable to your committee, at a time 
when the state is ai)out to apply large additional means 
to the uses of education, and to adopt, as we hope, a 
permanent state system of public instruction on an ex- 
tended and comprehensive plan, that the right and the 



d»Uy of the government in regard to the subject of popu- 
lar education, should, if possible, be clearly and accu- 
rately defined. What consiitutional right lias the go- 
vernment to impose the burthen of taxation on indivi- 
dual property, or to employ the public fund?, however 
oltained, for the furtherance of any such object as that 
of popular instruction ? Is not education a personal ad- 
vantage, accruing to the individual instructed, as much 
as the possession of property, or any other good — and 
by what right does the government undertake to bestow 
personal benefits at all, much more to compel one class 
of men, because they are men of substance, to bear the 
expense of benefits gratuitously bestowed on another 
class ? 

The right and duty in question, seem, to your com- 
mittee, to rest mainly on two grounds. 

In the first place, the power over education is one of 
the powers of 'public police^ belonging essentially to 
government. It is one of those powers, the exercise of 
which, is indispensable to the preservation of society — 
to its integrity, and its healthy action. It rests on the 
same foundation as that w^hich is employed in defining 
and taking cognizance of crime, in erecting courts, both 
of civil and of criminal jurisdiction, in establishing jails 
and penitentiaries, and in compelling the performance 
of contracts, and the reparation of injuries. In this 
point of view, it is one among a number of means to 
the same end, either of which, or all of which, mav be 
freely used, according to the wisdom and discretion of the 
public authorities. All are lawful, and equally lawful 
and constitutional modes of action. In the present case, 
however, the choice is not a question of expediency or 



113 

economy only — thougli certainly important in the latter 
point of view; but it becomes a question of humanity 
aI.-?o. For wbile it will always be necessary to j)rovide 
for the pimishment of offences against society, when 
committed, and for the compulsory observance of per- 
sonal obligations, and redress of personal grievances, 
yet it is vastly preferable, undoubtedly, that, if such a 
thing were possible, there should be no grievances to be 
redressed, no broken promises, and no committed crimeSc 
It is the aim, and the undoubted tendency of education, 
properly understood and conducted, to accomplish this 
object — an object of incalculable benefit to human soci- 
ety. As a measure, designed to operate only as a law 
of police, the public support of education goes behind 
all crime, and all injurious and disturbing action in 
society, and seeks to occupy the intellect and the aflec- 
lions of men, and simply by informing the mind and 
moulding the temper, by demonstrating that it is the 
interest and the happiness of each to be just and ge- 
nerous towards all, by letting a little light in on the 
understanding, and touching the heart, either to take 
from them the disposition to offend one another, or to 
injure society, or to arm them with strength of purpose 
to resist every temptation to do so. 

But there is another and broader ground, srill, on 
which to rest the power and duty of the state, in regard 
to educaion. That wfiich we liave already noticed, 13 
enough for the authority, if the state choose to exercise 
it, and in the opinion of your committee, enough for 
the duty also. But the consideration which we now ap~ 
proach, is not only sufficient for the abundant justifica- 

10* 



114 

tion of authoritative action — it demands action, and 
the stale could not justify itself to the people without it. 
The people of this state, having united themselves 
together in a civil society, have agreed to secure to them- 
selves, or to attempt to secure to themselves, the highest 
advantages of the social compact, through the agency 
of certain forms of government and administration. — 
We have adopted the representative system ; and we 
start from the position, that the whole political power of 
the coimtry, much of it for immediate exercise, and all 
of it by ultimate reference, is in the hands of the peo- 
ple. And, on this grand position, as a basis, do all our 
constitutional forms absolutely rest. But just as chil- 
dren are unfit to govern themselves, so are uneducated 
men, being still children, though of huge growth, un- 
fit to govern themselves. In one mode or another, as- 
sociations of such men always have had, and always 
will have, protectors and masters ; and we hardly need 
add, that a people with masters of any sort, as the basis 
of a free representative system, is a contradiction in terms. 
It is evident, therefore, that popular cultivation, as dif- 
fusive and general as the numbers composing the re- 
public, is indispensable to the perservation of our re« 
publican forms — and hence arises the great constitutional 
duty of the government. It is the duty of self-pre- 
servation^ according to its actual mode of existence^ 
for the sake of the cowmon good. The highest good 
of the whole, as a bod}^, is the object in view ; that 
good is to be attained only, according to the very terms 
of the original compact, through our adopted forms; 
and the duty of preserving and maintaining those forms, 
in thtir vigor and purity, becomes, at once, the very 



115 

highest duty and obligation of (hose who are entrusted 
with the administration. It is a duty, every instant, 
and perpetually, in force. No change of administra- 
tion can affect it; and the moment it is denied or ne- 
glected, that moment is the cause of the repubhc re- 
pudiated and betrayed. 

It is easy, we think, to know when this duty of main« 
taining our constitutional forms, by the care which is 
taken of the structure on which they rest, is in the 
way of being faitlifully performed. The duty is not 
well provided for, unless some rational plan of public 
instruction shall have been devised and adopted, the ob- 
ject and the probable effect of which ehall be, to lead to 
the cultivation of every child in the community, at least 
so far as to fit them all, without exception to the extent 
of their capabilities, for an intelligent discharge of the 
common and ordinary duties and responsibilities of social 
and political life, to which all, or nearly all, are called 
by the very conditions of our social and political forms. 
The future mother must be educated in every female 
child — a matter not to be neglected if we would have men 
in the republic ; and in every male child, must be edu- 
cated the future elector, juror, and local administrator. 

The duty of being educated is, undoubtedly, one of 
positive obligation, resting on every citizen, as part of 
the original compact between every citizen and the whole 
body of citizens ; and as far as instruction is attainable 
in youth, the obligation rests on parents and guardians. 
It is a duty which by no means concerns the individual 
only ; it is one in which every other individual, and the 
whole community have a deep interest. The verdict of 
jurors, and the decision of a contested election, perhaps 



116 

by tho casting vote of a single person, are matters of 
vast concernment to others, besides those who render 
the verdict, or turn the election. 

But while there can be no doubt about this personal 
duty, and the claims which the community has on eve- 
ry member in regaid to it, it is clearly one which could 
not, especially with us, be enforced by any direct and 
arbitrary exercise of power. Happily, we think, nothing 
of this sort is necessary, any more than it would be de= 
sirable. 

There are evidently two difficulties in the case to con- 
tend with. One of tliem is, that so long as men differ 
in endowjnent and in the allotments of Providence, and 
80 long as the rights of property shall be respected, there 
will always be a considerable portion of the community 
unable, for want of the necessary means, to sustain the 
expenses of education. Whenever this is the case, we 
hold it to be the duty of the slate to supply the necessa- 
ry means ; and on this principle the state has long acted. 

The other difficulty in the case is the more serious 
one of the two. It is, that perhaps a large majority of 
those who have the means of meeting the necessary 
outlays fur the proper education of their children, are not 
disposed to use them for any such purpose. The bur- 
then in many cases is undoubtedly a heavy one, and it 
is difficult to convince parents of the unquestionable 
truth, that they can make no provision for their off- 
spring by pecuniary aids, which can in any degree 
compensate for the want of adequate mental and moral 
cultivation. 

This is a difficulty to be met by the Rtate, with mea- 
sures of a delicate character — measures calculated to in- 



117 

duce and to persuade — measures aiming to bring in 
public opinion to iis aid, and appealing at once to ihe 
good sense, the pride, and (he interest of ilie parties 
concerned. Whatever compulsory action is resorted to, 
must be of a gentle and paternal character, and be sur- 
rounded and accompanied with every circumstance of 
kindness, and with whatever is best adapted to move 
and to interest. Such, in a great measme, lias been 
and is the nature of the system of public instruction 
long in operation in this state, so far as designed to meet 
the difficulty here suggested : and your committee pro- 
pose some important measures, regarded by them as 
worthy of. great consideration, not certainly to change 
materially the features of the system in this respect, but 
to modify them, and if possi'ole to give them eflficiency. 

There is one other test to which your committee 
would refer, as one by which we may know whether 
the state has performed, or is performing, its great con- 
stitutional duty of self-preservation for the common good, 
by taking due care of the subject of popular instruction. 
That test is, whether or not the system be such as makes 
education a thing of practicable and probable attainment 
by the class of the comparatively indigent. For if it be 
otherwise, there can be no security for the continuance 
of our constitutional forms. In this age of the world, 
the rich in any civilized community will be educated; 
and if the poor cannot be, and are not, the necessary 
consequence is, that, a separation takes place. Know- 
ledge is power, and it will be exercised ; and a selfish 
aristocracy, formed of those who are at the same time 
rich and educated, will boar the class of the indigent and 
ignorant to the wall. The community being once di- 



118 

vided into these two great classes, it matters little, to the 
present argument at least, whether the powerful bear 
sway wisely and well, or oppressively : in either case 
the balance is destroyed which makes our government 
what it is ; our constitutional forms are not preserved ; 
and so much of common good as depended upon them, 
much or little, is sacrificed. 

Nor is it enough, in our judgment, to satisfy the de- 
mands of the test now referred to, that our common 
schools are made accessible to all classes, the poorest as 
well as the better conditioned. If the system stopped 
here, it would aid in creating the very distinction and 
separation which ought to be avoided. In the first place 
the condition of the common schools themselves must be 
elevated ; and if it is not, the consequence will soon be, 
that they will come to be regarded as the seminaries of 
the poor, when the rich will desert (hem ; yielding them 
neither countenance nor support any further than forced 
to do so, or contributing to sustain them, like other in- 
stitutions for the poor, as public charities. The condi- 
tion of these schools then must be elevated. They must 
be common places of resort for all classes as far as pos- 
sible, where the youth of the same neighborhood, how- 
ever otherwise separated, may meet, as youth now meet 
in our academies and colleges, to sacrifice all distinctions 
except such as grow out of various success in the prose- 
cution of the same studies. 

But this is not all; the way to the higher schools — 
to the academies and colleges — must be open, at least to 
the young man of genius and enterprise amouir the 
classes of the indigent, as well as to his more wealthy 
rival. 



119 

There is one way, and only one in which this can be 
done ; and that is, by such hberal endowment of the 
better s:hool?, by private raunificence and state patron- 
age, as will bring down the wages of instruction to the 
person taught, to a moderate sum. When this is ac- 
complished, the balance between the wealthy and poorer 
classes will be easily struck ; for though their relative 
numbers will still be unequal in these schools, the sum 
of knowledge and intellectual power among the sturdy 
and ambitious sons of poverty, will be, out and out, 
equal to that acquired and displayed by the more nu- 
merous class of those among whom must always be 
many whom indulgence and luxury have enervated. 

. Your committee are happy in having it in their power 
to stale that the principle here suggested in relation to 
the higher schools, is one which has long been recog- 
nized and acted on in this state : and it needs only to 
be carried out and properly applied to make it efficient 
in producing the best and most auspicious results. 

Your committee would now ask attention more pai- 
ticularly to the system of public instruction in this state, 
and to the measures proposed by us for its improvement. 
We speak of course only of those scholastic institutions 
to which the public bounty flows, and which are under 
the care and supervision of the public authorities. 

These institutions are ; first, common schools ; second, 
academies ; third, colleges ; and fourth, a State Univer- 
sity ; this last, however, never having yet become a 
school, but only existing as a board of inspection and 
visitation. 

To begin with the common schools. Your commit- 
tee suppose that it must be conceded on all hands, tliat 



120 

the children of this state who receive instruction in these 
scliool^', are, in no degree, educated as they ought to be. 
Apply to them the test of qualification already staled in 
this report, and it is certain that the mass fall vastly be- 
low the proper standard ; and we do not hesitate to af- 
firm, that it is just as important as the continued ex- 
istence of peace, security and republican freedom among 
us, that a decided effort should at once be made to ele- 
vate the standard of instruction in the common schools. 
With every yeai, nay, with every month's delay, the 
army of the uneducated is reinforced with frightful 
numbers; and we are of opinion that nothing but 
prompt action can save us. 

And why are the five hundred thousand children of 
the slate, though attending school, for the most part un- 
educated ? We would repeat, and we would, if possible, 
teach every parent in the state to repeat, after M. Cousin, 
the pregnant maxim — "As is the master so is the 
school." It is simply because the schools are not sup- 
plied with good teachers that we have not good schools. 

To this point then, the attention of your committee 
has been earnestly directed ; and after entertaining a 
variety of propositions on the subject, we have come to 
the conclusion on the whole, that it is better to lake the 
plan already adopted by the regents of the university, 
for the instruction of common school teachers, rather 
than to attempt a new one, and to give it at once suflfi- 
cient extension to adapt it to the exigencies of the state. 
We propose therefore, that there shall be a department 
for the education of teachers in one academy in every 
county of the state ; and we are satisfied, after mature 
examination, that, while the presence of a normal school 



121 

ill eacli county cannot fail to be salutary in its influence 
on many accounts, there will be no more than a com- 
petent supply of teachers from these sources, whether 
for the immediate or the permanent demand, provided 
only we can succeed in creating and increasing that de- 
mand as we think will be done, if the measures which 
we contemplate for that end shall meet with the favor 
and approbation of the legislature. 

It is undoubtedly true that, in the present state of 
popular education, and with the prevalent indifference 
to the whole subject in the districts, no very great num- 
ber of well qualified instructors would meet with em- 
ployment, at competent wages, in the district schools. 
It would not be enough, therefore, to furnish well-taught 
teachers. They would still be forced to seek employ- 
ment elsewhere, or in other and more profitable occupa- 
tions. By doing only so much, therefore, we should do 
nothing valuable. We must go further, and prepare 
the way, if possible, for the prompt introduction of the 
masters we may furnish, into the ready and well-paid 
service of popular instruction. And it is the attempt to 
solve this most difllicult problem, which has cost your com- 
mittee more anxiety and labor than every thing else 
connected with the entire subject. We will submit to 
the house the result of our deliberations on this impor- 
tant point. 

And first, we propose to make the establishment of 
district libraries, heretofore attempted in this state by a 
law of 1835, imperative and certain, as prayed for by 
various petitions before us. The law, as it now stands, 
authorizes each district to tax itself for this object ; twen- 
ty dollars the first year, and ten dollars every year after- 

11 



122 

wards. We propose that the same sums shall stiJl be 
realized for these objects ; but that the state shall fur- 
nish half; while it shall be the duty of the districts, with- 
out choice, to tax their own property for the remainder. 

The law as it now stands has been nearly a nullity. 
We can hear of but few, exceedingly few districts, who 
have availed themselves of its provisions. Some sohtary 
libraries, however, have been established after great ef- 
forts and sacrifices on the part of individuals ; and from 
these we have the most satisfactory testimony that the 
benefits flowing from them have exceeded the highest 
expectations of the most sanguine advocates of the plan. 

To secure the benefits of these libraries at all, we are 
entirely satisfied that it is indipensable to make the levy- 
ing of the tax on the districts compulsory ; but while 
the state commands in this matter, as it ought to, we 
think it should also show a becoming liberality ; and 
this it will do by appropriating more than one hundred 
thousand dollars the first year to this single object. 

The committee would not disguise that they regard 
the estabhshment of these Ubraries as a thing of the 
very last consequence ; and if refused by the legislature, 
they are free to confess that they shall look to all sub- 
stantial improvement in the common school system, as 
something rather to be despaired of, than to be expected 
or hoped for. With these libraries in possession, it is 
calculated, on proper and sufficient data, that between 
seven and eight millions of volumes of books will at 
once be brought into use and perusal in this state, 
where now scarcely a book is read ; and that seven or 
eight hundred thousand persons, male and female, 
young and old, will become attentive and instructed 



123 

readers, of whom scarcely one is now entitled to the 
name of reader. Who can undertake to compute the 
sum of benefits arising from such a condition of things? 
— the intellectual tastes and habits that may be formed 
• — the new sympathies springing up between parent and 
child — the desertion of old haunts of dissipation and old 
habits of vice — the new and swarming births of thought 
and fancy that must occur — the occasional discoveries 
which genius may make of itself and its wonderful 
powers and impulses — the passions that shall be calmed 
— the differences that shall be healed — the broils that 
shall be quieted and allayed — the families, and neigh- 
borhoods, and country that shall be blessed — who can 
contemplate all this, and more that might be thought of, 
and not tremble, as a man and a patriot. Avith the appre- 
hension lest the country should lose, or fail, through any 
cause, to realize benefits so immense and so indispensa- 
ble? 

It vv^ill be seen that the committee place great reliance 
on the establishment of district libraries, in their influ- 
ence on both parents jind children, as a principal means 
of leading to the employment of competent teachers. 
But there are other means also on which we greatly 
rely. 

One of these is the very direct one of increasing very 
largely the fund appropriated by law for the payment of 
teachers' wages. It is proposed to double the sum sup- 
plied from the state treasury for this object ; to double 
also the sum which the property in the several towns 
now pays by compulsory taxation ; and finally, to au- 
thorize the towns to double the sum which they are now 
allowed to raise by voluntary taxation. 



124 

In this way the whole sum which would go into the 
hands of the commissioners of comi«on schools as public 
school moneys for distribution among the districts, would 
be about equal to the whole sum, including rale-bills, 
which was paid for teachers' wages, so late as 1833, 
and would fall but little more than one hundred thou- 
sand dollars short of the whole sum thus paid, accord- 
ing to the last year's returns. 

But the committee are unwilling to allow this large 
increase of public moneys for annual distribution, with- 
out making an effort to secure a correspondent exertion 
and liberality on the part of those who furnish children 
for the schools. If this be not secured, more harm will 
be done than good. If higher wages are not to be paid 
to teachers than before ; if the services of a better order 
of instructors are not to be required ; if the standard is 
not to be materially raised, then will this additional pub- 
lic bounty be wasted, and the extraordinary burthen of 
taxation which property will be made to bear, be only 
oppressive and tyrannical ; because in no degree useful. 
The poor who are unable to paf rate-bills will receive 
no more benefit from the schools than they now do; 
while those who are able but unwilling to pay will 
wholly escape the payment of their just proportion of the 
expenses of tuition for their own children, by casting the 
whole burthen on the state and on property. 

To avoid the evils here suggested, and to secure the 
employment of qualified teachers at fair prices, as fast 
as they can be found or furnished, the committee pro- 
pose two or three changes of some importance in the de- 
tails of the common school system. 

It is proposed, in the first place, to establish a mimi- 



125 

Lfnum of prices as the wages of instruction in the schools 
receiving any share of the pubUc moneys — the monthly 
wages of the male teachers to be not less than fifteen 
dollars ; and those of female teachers not less than ten 
— at the same time extending the term during which 
the school must be kept in each year, from three months, 
which is the present requisition of the law, to six months. 

In connection with this new provision in regard to wa- 
ges, the committee recommend a slight, but yet, as we 
believe, an important change in the manner of ascer- 
taining the qualification of teachers. The whole sub- 
ject of local inspection undoubtedly demands revision. 
At present, however, w^e only propose that candidates for 
teachers of a certain description of schools to which we 
shall presently refer, shall only be admitted to examina- 
tion by the local inspectors on their presenting some pro- 
per testimonial of their scholarship from some of the 
higher schools, academies or colleges ; and that in all 
cases the candidates for teachers of common schools shall 
be examined by, or under the direction of, the inspec- 
tors, in certain studies and subjects which shall be, from 
time to time, named and prescribed by the superintend- 
ent. 

With the same object and result in view, it is next 
proposed to make a most important change in the prin- 
ciple on which the additional funds, whether derived 
from the state treasury or from local taxation, shall be 
distributed among the districts. On the plan now pro- 
posed, the apportionment by the superintendent of the 
w^hole of the school moneys will be made precisely as 
heretofore, among the several counties, towns and cities; 
and the new mode of distribution applies only to the 
11* 



126 

moneys in the hands of the commissioners of each town. 
The proposition is, that in each town one equal half of 
the public school moneys in the hands of the commis- 
sioners, instead of being apportioned as the whole has 
heretofore been, among the several districts in proportion 
to the number of children residing in each between cer- 
tain ages, shall hereafter be apportioned in a ratio ac- 
cording to the average monthly rate of wages paid to 
teachers, for six months, in each of the several districts. 

It is supposed that the business of teaching, hke all 
other businesses requiring learning and skill, will, as a 
general thing, command wages and be paid for, as be- 
tween those who practise it, according to excellence and 
superiority ; and the proposed mode of apportioning a 
part of the public moneys among the districts is intend- 
ed to operate directly as a bounty to those districts of any 
town which shall most faithfully serve the great cause 
of popular instruction, by employing the best teachers. 
And this method of apportionment is recommended with 
the more confidence, not only in its efficacy, but in its 
justice, because it may be made to appear, by an easy 
calculation, that while the bounty to one or two districts 
in a town which might be induced to give the highest 
rate of wages would be very considerable, yet the 
amounts distributed to the remaining districts would be 
only the merest trifle less than they would receive under 
the old mode of distribution. In the mean time, an ex- 
ample would be set in the town which could not fail to 
be of the happiest influence on all the districts, demon- 
strating to their observation the benefits of good instruc- 
tion, and inciting to a mutual and healthy emulation. 

But your committee propose still another way of reach- 



i2r 

ing, if possible, the great object in view, that of securing 
the employment of competent teachers, and elevating 
the standard of education in the common schools. It is 
evident that there is a strong tendency in the towns to 
an unnecessary and injurious multiplication of districts — 
thus vastly increasing the expenses of education without 
any corresponding benefits. And the committee have 
been disposed to put it in the power of two or more dis- 
tricts to consolidate, and to offer some inducements to 
them to do so, where it can be done judiciously. The 
point, however, to which our attention has here been 
chiefly directed, has been the importance, for the sake 
both of efficiency in teaching and of economy, of form- 
ing the younger, and the older and more advanced pu- 
pils into separate departments, or schools. It is certainly 
the most wretched economy to employ a male teacher 
at eighteen or twenty-five dollars a month, to instruct 
infants, when a well-qualified female could be employed 
at ten dollars, and, ten to one, perform the service the 
better of the two. Besides it is deemed a hopeless ex- 
pectation to find men really qualified by their learning 
and talents to instruct youth from ten years old and up- 
ward as they ought to be, who will be employed, at any 
wages, to teach children of five. 

To meet the case suggested, it is proposed, by your 
committee, to authorize several districts, not more than 
four, without dissolving the primary districts, to unite 
to form a high-school district and establish a district 
high-school. It is supposed that, without much expense, 
one of the district school-houses may be taken and fitted 
for the central school. If the remaining school-houses 
in the united districts will accommodate the primary 



128 

schools for the younger children, then the central school- 
house will need to have perhaps but a single apartment 
for the high-school; and otherwise, a separate apart- 
ment, so as to accommodate both schools under the same 
roof, would be required. In any event, the extra ex- 
pense under this head would be very inconsiderable to 
the united districts. 

It is proposed, as connected with this plan, to fix a mi- 
nimum of monthly wages to be paid to the high-school 
teacher, of twenty-five dollars. This is deemed desira- 
ble, not only as likely to secure the services of proper 
instructors, but as establishing an elevated grade in the 
business of common-school instruction. And besides, it 
is demonstrable, that with this higher rate of wages to 
the high-school teacher, all the benefits of these supe- 
rior schools may be secured to the towns and the chil- 
dren of the state, with very little, if any, additional 
expense, in the aggregate, for tuition. As take for ex- 
ample a town having twelve districts, the average in the 
state ; and such town could support three district high- 
schools, with eight primary departments, all with quah- 
fied instructors, for wages scarcely more, if any, in the 
aggregate, than would be required to sustain the twelve 
district schools on their present footing. 

The committee would add on this important point, 
that the plan here suggested is not wholly a new expe- 
riment. We have information of its having been vo- 
luntarily attempted in some towns in the interior of the 
state, and wherever tried it has been attended with com- 
plete success. We have no hesitation in commending 
the plan, in the strongest manner, to the favor of the 
house ; and with some encouraging aid which it propos- 



129 

ed the state shall ofler, towards furnishing these high 
schools with necessary apparatus, we are prepared to ex- 
pect from the plan, if the legislature shall sanction it, 
the happiest and most satisfactory resxilts. 

We have now done with the common schools, after 
commending them, as w^e beg leave to do, with all the 
vast and inappreciable interests belonging to them, to the 
continued care and favor of the state; only adding, how- 
ever, that a chief interest belonging to the consideration 
of the higher seminaries, to which we now for a moment 
pass, arises from the intimate connection between them 
and common schools, as part of the same system of pub- 
lic and popular education. 

In regard to colleges and academies, we have already 
stated in this report a principal of vital importance, pro- 
per to influence and govern the action of the state in its 
patronage of these institutions. If there were no other 
reason, they should be sustained with aid from the pub- 
lic funds, as schools for the education of teachers ; not 
merely where departments for that purpose are especially 
established, but every where if necessary. There is, 
however, another and equally cogent reason why such 
aid should be furnished, and that reason is found in the 
principle just referred to. We need not repeat it. Let 
it be enough to say, that the state ought to see that the 
doors of these institutions are open to the comparatively 
indigent ; it will never do to permit education to become 
a monopoly of the rich. There is nothing indeed in the 
manner in w^hich these higher schools are founded and 
constituted, tending to so unhappy a result ; the proper- 
ty of the w^ealthy and the munificent is freely bestowed 
for their endowment, and thus their advantages are 



130 

brought within the reach of nearly all. When the ne- 
cessary buildings are erected for the accommodation of 
faculty and students, and a proper library, museum, and 
apparatus furnished, for all which the student pays no- 
thing or very httle ; and especially when to this is added 
the endowment of professoiships, or the possession of 
productive funds, so that the Avages of instruction also 
are paid \vith but small contributions from the student 
or none at all ; then are these schools placed on the 
right foundation ; then will they become nurseries of 
men trained for the cause and the service of the re- 
public ^ then, and then only, will they operate to check 
the growth of aristocratic pride and distinction, and pro- 
mote that healthy equality without which we may per- 
haps have the forms of republicanism, but none of its 
essence or its benefits. It is easy enough, we think, to 
see, if the system as we have it, should be left to change 
itself into one in which the whole onerous expense of 
instruction in the higher schools — tuition, rents, the use 
of books, and apparatus, with all the necessary incidents 
— must be borne by the individuals instructed, that edu- 
cation could not be, and would not be, a thing in which 
the poor, or those in moderato circumstances, v/ould have 
any part. And it is against every such tendency that 
we think the pubhc ought strictly to guard ; and the 
state does, and may, materially aid in the matter, by a 
judicious application of its public funds to the encou- 
ragement and support of education in colleges and aca- 
demies. 

It will be seen by the bill prepared by the committee^ 
that they propose to increase moderately the annual sum 
now distributed by law, among the academies of this 



131 

state, subject to the visitation of the regents ; and also 
that a further sum shall be annually distributed among 
other academies, not yet perhaps so well endowed as 
those just named; and, therefore, more necessitous: 
taking care, however, that they shall all have the cha- 
racter of classical schools of the rank to which they claim 
to belong. 

A principle seems to have obtained in the state here- 
tofore, in regard to aid furnished to academies, which 
the committee are disposed to sustain. These institu- 
tions are numerous, and it is desirable they should be ; 
and it is quite improbable that the treasury of the state 
could bear the drains upon it, if it was once adopted as 
a practice to make grants to academies of considerable 
sums, by way of endowment ; as for the erection of 
buildings or to pay the debts incurred in the erection. It 
is believed to be decidedly better to look, as heretofore, to 
voluntary and united contributions and private munifi- 
cence, to supply to every academy the necessary erec- 
tions for the accommodation of students, and then for 
the state to come in with its annual bounty, to aid in 
sustaining current expenses. 

Colleges, in this respect, appear to your committee to 
stand on a footing somewhat different, and so they have 
been heretofore considered. The state has, in some in- 
stances, furnished very liberal pecuniary aid to the found- 
ing and building up of colleges. When the state was 
younger and individual wealth was less abundant than 
it now is, it is probable those colleges could not have 
existed, or been preserved, without such assistance. And 
even now, since private fortunes and means have greatly 
increased, the establishment and endowing of a college 



132 

out of individual contributions, is a thing not easily ac- 
complished. The necessary cost of college buildings, 
and dwellings for the faculty, and of furniture, library, 
apparatus and museum, is very great \ and if those 
who attempt such an enterprise are left to stand alone, 
it is only after years of effort, and toil, and anxiety, and 
sacrifice, that they can finally succeed. And it seems to 
your committee, on the whole, that there is no good 
reason why the past practice of the state in making di- 
rect grants to colleges for endowment, should be wholly 
pretermitted. The bounty of the state can never be call 
ed for, for this object, to any such extent as it heretofore 
has been. And no demand of the sort is at present 
made from any of the colleges. 

The committee recommend, on the same principles 
on which current aid is afforded to academies, an annual 
appropriation^ for a limited time, of six thousand dollars 
each, to Geneva college, and the University of the city 
of New- York; and four thousand dollars each, to Ha- 
milton and Columbia colleges. All these institutions 
are embarrassed for want of current support, and we 
hope that at least the state will not see them sink under 
such embarrassments. 

There is one topic more which the committee feel 
bound to touch before concluding their report. They pre- 
sent the subject with a brief but frank expression of their 
views and opinions, in order to place it in the possession 
of the house for review, and for the exercise of its better 
judgment. The subject is an important one, and it will 
be wholly for the house to say, whether the suggestions 
of the committee shall be acted upon at all, at the pre- 
sent session, or whether the whole subject shall be laid 



tm 

over for such consideration as the community may see 
fit to bestow upon it. 

We have already said, that the State University, as 
now constituted, is not a school. It is without locality, 
without endowment, without literary or scientific pro- 
perty. The regents form a board of inspection and visi- 
tation, for all departments of public instruction above 
the common schools. To the care of the latter a super- 
intendent is appointed. 

Now the changes which your committee would sug- 
gest, are in a great degree, organic. We will state 
them ; but we will not undertake to sustain our views 
by argument or illustration. 

We think in the first place, that there should be ap- 
pointed in this state an officer who should be the head 
of the system, and called, perhaps, the President of Pub- 
lic Instruction. That his office should be wholly sepa- 
rated from any political office whatever, and, as far as 
may be, from every possible political connexion or inte- 
terest. He should have especial charge of common 
schools and academies, and of the funds appropriated to 
them ; and should devote himself exclusively to the 
work of improving and perfecting the system of which 
he would be the head. It is work enough to occupy all 
the time and the energies of any one man. The re- 
gents should still have the power of visitation over the 
colleges, properly supervisable by the State University ; 
they reporting to the President, as the head of the sys- 
tem ; and he reporting of course, in all things, to the 
legislature. 

Finally, we think that the time has come when the 
State University should be something better than a 

12 



134 

name. It is now a corporation ; give it, we say, a local 
habitation, and invest it with some of the usual signs of 
physical existence. A beginning might be made by 
declaring by law that what is now known as the State 
Library, always to be located at the Capital and occupy 
apartments in the Capitol buildings, shall hereafter be 
known as the Library of the State University ; and let 
the funds for its increase, which should be more liberal 
than heretofore, as well as the Library, be placed in the 
hands of the regents. A moderate sum annually should 
be added, for the gradual establishment of an anatomi- 
cal or other museum, to be located also at the Capital. 
In this way, it is supposed by your committee, that 
while the cause of science and learning would be imme- 
diately subserved, preparation might gradually be made 
for the University to enter on its proper business, as a 
school of instruction in the highest branches of learning, 
under well endowed professorships ; and thus the state 
and the country, in time, escape the reproach of being 
obliged to send the sons of the republic to other countries, 
and to kingdoms, with which we have little connexion 
and no congeniahty or sympathy, for the advantages 
of education in its higher walks and attainments. 

In the bill which we propose, will be found provisions 
answeiing to the suggestions which we have now sub- 
mitted in respect to the reorganization of the executive 
department of public instruction. 

In concluding this report, your committee would say, 
that they cannot trust themselves to speak of the sub- 
ject of Education, in so grave a document as this, as they 
would like to speak — of its vast importance, its advan- 
tages, its necessity. In another place, we should in< 



135 

dulge in feelings and language which would not be be- 
coming here. We should speak of the spectacle of an 
educated people — educated to the top of their faculties, 
as physical, organized, intellectual, moral and religious 
beings — educated above want and above pride, above 
fear and above reproach — educated to know what truth 
is, what charity is, what justice is, what liberty is — edu- 
cated to be generous, and peaceful, and free, and happy 
— educated to understand, and feel, and respond to every 
call of duty and of patriotism — educated out of vice and 
meanness, and into lofty thoughts and noble sentiments 
— educated for home, for pleasure, for business — educated 
for themselves, for their families and kindred, for their 
friends and for their country. But we forbear. Such 
a country and such a people we believe ours ought to 
be, and may be. 

The committee ask leave to bring in a bill 



REMARKS 

Ln TjHE assembly of NEW-YORK, TOUCHING THE ECONO- 
mical policy of an extended system of internal 
improvements: march 13, 1838. 

[Mr. Ruggles, Chairman of the Committee of Ways and 
means, hud presented his Report on the Finances and Re- 
sources of the State: and a motion was pending for the 
printing of a large number of extra copies] 

Mr. Speaker — For one, I am in no degree surprised 
at the course of remark in which the member from Her- 
kimer (Mr. Mann) has now indulged. We have just 
listened, a delighted auditory, to the reading of a docu- 
ment, drawn up with most uncommon clearness, com- 
prehensiveness and power, which is now to go out to the 
community, with the undoubted effect of waking up 
this great, and greatly abused people, from a long and 
heavy slumber, into which they were thrown some ten 
years ago, by the skilful fnanijndations of a distinguish- 
ed citizen, then a member of the senate of this state. 
It was due to this house, constituted as it is, that such a 
Report as that we have now heard, should have been 
made ; and we may look to that particular effect to be 
produced by it, to which I have just alluded, with en-^ 
tire confidence. Sir, it was clearly the design of the 
financial paper, produced by the distinguished senator 
referred to, in 1827, to aim a fatal blow at our great 
works of internal improvement, while it should at the 
12* 



138 

same time, if possible, strike down the character and in- 
fluence of that great man under the auspices of whose 
name those works had been commenced and prosecuted. 
The effect of that paper, able and deceptive as it was, 
was unhappily too great ; and from that day to the pre- 
sent, the policy of this state on the great subject affected 
by it, has been uncertain and timid, without any com- 
petent system, and without any such efficiency, or re- 
sult, as the condition of the state, and the condition of 
things about us demanded. Now^, sir, I hail the report 
just read as eminently fitted to expose the sophisms of 
the former financial paper, to dissipate the mists which 
have gathered over the state, and to w^ake us up at 
once to a sense of our past injuries, and to the percep- 
tion of our true interests. And it would have been 
strange indeed, if such a document as this had been al- 
lowed to pass without some commentary, designed, as 
far as possible, to take off its edge, detract from its high 
merits, and weaken its certain influence. Let, there- 
fore, gentlemen be indulged in pouring out their ill-dis- 
guised bitterness on the report. It can do no harm — 
good rather. 

But, sir, I have been called up by the extraordinary 
doctrine which has been put forward by the member 
from Herkimer, in the course of his remarks. The 
alarm of taxation is sounded : and we have been told 
that it seems to be wholly forgotten, that a great sys- 
tem of internal improvements, such as is sketched in 
this Report as being within the financial resources of 
the state, can only be carried forward and sustained, by 
taxation upon the people, direct or indirect Now, sir, 
the term taxation as here used is meant to convey aw 



139 

idea of injustice and oppression ; for, in the same con 
nexion, the member talks of the laboring poor, and those 
who live by the sweat of the brow, as likely to be ground 
down with taxes for the exclusive benefit of other classes ! 
He means I take it, when he talks of taxation, to be un- 
derstood as employing the word much in that sense in 
which it is used to characterize the financial policy of 
other countries and other governments ; where the peo- 
ple are drained of their substance to support the govern- 
ment for the benefit of the government^ and not, or 
only in a secondary degree, for the benefit of the people. 
It is in this odious sense, as a thing unjust and oppres- 
sive, that taxation is spoken of as the necessary conse- 
quence of any system of internal improvements prose- 
cuted by the state — and this is done thus promptly as 
an earnest, that the cry of taxation, in other words, of 
injustice and oppression, is to be raised, as if the state 
were inhabited by an ignorant instead of an intelligent 
population, to frighten the community from the support 
of a policy in which their very highest and best inte- 
rests are involved. 

Sir, for myself, for this legislative body, and I believe 
I may say for this whole people, I repudiate the extraor- 
dinary notions referred to. They are unworthy of this 
place, and of this people. In our country let it be re- 
membered, that governments are instituted for the bene- 
fit of the people, and not at all for the benefit of the go- 
vernments; and when the people sustain these govern- 
ments by their means and substance, as they always do 
directly or indirectly, this is not taxation in any odious 
sense whatever — it is simply paying for a benefit of their 
own choosingj and in their own way. If govemnacttT 



140 

is aoswenng the end of its institution — if its policy and 
measures have that end in view, and if they result, as 
they must if they are wise, in the common good, then 
is the community paying for a common benefit, which 
could not very well be dispensed with, and which is al- 
ways worth more than it costs. Sir, I am in favor of 
this sort of taxation ; and if government could not be 
supported without direct taxation, why then I should 
be in favor of direct taxation, and I hope and believe the 
people of this country are intelligent enough to under- 
stand, in that case, what would be their duty and their 
interest. Shame on any republican community that 
would not. 

And then to carry the principle from the ordinary bu- 
siness of government, to that important policy which 
makes so vast a part of the business of enlightened go- 
vernments at the present day, and especially in this 
country: — The doctrine is as we have just heard it, that 
the state must not project and carry on extended works 
of internal improvements, because as government has 
no means of its own^ and can expend nothing for such 
works but the means of the people, it is of course the 
people who pay for these works ; and this is taxation — 
odious and oppressive taxation. Sir, what sort of doc- 
trine is this, for this age and country ? For whose be- 
nefit and advantage are these works undertaken ? Not 
certainly for the government. If the ground had been 
taken, that the benefits to be derived to the community, 
from any contemplated system of internal improvement, 
would not be worth their cost to the people, that would 
have been fair ground at least, whatever might be 
thought of the soundness of the position. But that is 



141 

not the ground. It is, that, such system cannot be car- 
ried forward without means ; that the means belong to 
the people ; and that this is taxation, and taxation is 
oppressive to the people. 

Sir, if this is good doctrine at all, it is good for more 
«ases than the one to which it is applied. Taxation 
under such a government as ours is precisely what pay- 
ment for benefits and advantages, voluntarily purchased 
by individuals, always is. And hence, if this doctrine 
be sound, a man must not employ a physican, because 
he would be taxed for it ; nor a schoolmaster, because 
he would be taxed for it ; nor a tailor to cut and fit him 
a coat, because he would be taxed for it. He must noi 
travel on a turnpike, because he will be taxed for it : 
nor trust himself, or his property, on a rail-road, or a 
canal, or in a steamboat, because he would be taxed 
for it. The doctrine could not be satisfied, short of a 
mighty backward revolution in human affairs. The 
least that could be done in this state would be to fill up 
the canals, break up the rail-roads, and above all things 
to abandon the thousand uses to which the mighty 
power of steam is applied. We must forego the best 
blessings of civilization, and all the advantages arising 
from the present advanced state of the arts and of know- 
ledge, because these are not to be enjoyed without taxa- 
tion ! 

Sir, I hope not ; I believe not. For myself, and in 
the name of the people of this state, I reject the mon- 
strous doctrine and argument. The people of this state, 
I answer for it, are ready and willing, not only to take 
the untold benefits of a judicious system of internal im- 
provements, but to pay for them — in other words, they 



142 

are ready to make a reasonable outlay of their means 
and their credit, for the purchase of profit and advan- 
tage in return vastly beyond a mere equivalent, which is 
the whole effect of this odious and oppressive system of 
taxation, whenever and wherever it is wisely applied. 
The people are not paupers, seeking to have their es- 
sential wants supplied gratuitously, nor will they give 
up for ever the great and glorious advantages of their 
position, for an unmeaning cry of taxation that may be 
raised to alarm and deter them. 

But I shall not pursue the subject. I am for the print- 
ing of the largest number which has been named of this 
remarkable document. Sir, let us give it wings — send 
it forth on every wind — we cannot spend the little mo- 
ney it will cost to better profit. It ought to, and will 
find its way to every quarter of the state, and of the 
country : Nay, it will be read with eagerness and ad- 
miration in other and distant lands. 



SPEECH 

On banking, currency, and credit, deliverkjd in 
the assembly of new-york, march 29, 1838, up- 
on the passage of the general banking law. 

[The General Banking Law so called, authorized any 
person, or Association, to issue notes for circulation as mo- 
ney, on a pledge of State Stocks with the Comptroller, or 
a pledge of land and Stocks, one half of the amount at least 
being Stocks.) 

Mr. Barnard proposed to amend the bill in two par- 
ticulars : 

1st. Requiring the bankers under this law to keep 
their notes at par in the city of New- York. 

2d. Requiring them to limit their issues to five times 
the average monthly amount of specie on hand. 

The proportion of specie to circulation was first pro- 
posed by Mr. Barnard to be fixed at twenty per centj 
afterwards at fifteen. The bill finally passed both 
Houses with the proportion fixed at twelve and a half 
per cent. 

The bill and amendments being under consideration, 
Mr. Barnard spoke as follows : 

Mr. Chairman: I have now a most responsible and 
a most embarrassing duty to perform. I occupy a po- 
sition in regard to this bill, both before this house and 
before the country, which is neither pleasant nor com- 



144 

fortable. It is well known that I ditFer m opinion from 
those in this house, and out of it, with whom I am most 
anxious to agree, on the policy of this bill as it now 
stands, on what the true character of the bill is, and 
what is to be its operation and effect upon those great 
interests on which it is to act. This difference of opinion, 
I am afraid, is a radical and wide one. My friends^ 
who are so ardent and so efficient in the support of this 
bill, seem to regard its grand feature — the security which 
it offers to the bill-holder — as one of perfect soundness 
and safety in all respects, and of inappreciable value. 
I look on that same feature with distrust, and see in it 
the seeds of mischief. With that feature in it, they be- 
hold in this bill the means of reviving the drooping com- 
merce, the business, and the general prosperity of the 
country : while I am afraid that it is but too well calcu- 
lated to be made a cover and shield for those whose busi- 
ness it is to prey on society, and that while in one quar- 
ter it may afford some immediate relief, elsewhere, and 
finally everywhere over the state, it will open the way 
to frauds and to intolerable evils. 

On the other hand, I propose certain amendments, 
one of which in particular I think indispensable to the 
safe action of the bill, but which my friends regard as 
something at least fanciful if not absurd, resting in mere 
theory, of no practical utility anywhere and least of all 
here, and only embarrassing the free action of a system 
beautiful and altogether perfect in itself. They verily 
think they have happily hit on a project for banking, 
splendid and new, the wisest, the safest and the best 
ever yet devised, while I am so unfortunate as to view 
it, standing as it now does, rather in the light of another 



145 

experiment on the currency, not untried, but never tried 
with success or without mischief: another effort at tinker- 
ing the currency, and coming nigh to being a total de- 
parture from every sound and well established principle 
of banking. 

Among the strenuous supporters of this bill in its pre- 
sent shape, I recognize many personal as well as political 
friends: many of experience and tried judgment in legis- 
lation and public affairs, and to whose opinions I should 
defer with pleasure anywhere — except here — except here 
— Mr. Chairman, in this Legislative Hall, where, though 
esteeming myself to be the humblest individual on the 
floor, I feel bound to maintain my position, even to- 
wards the loftiest and proudest of the people's represen- 
tatives here, as an equal among equals. At the same 
time, it is not a little embarassing to be obliged to set up 
opinions of mine, on so grave a subject as that now be- 
fore us, against what seems at present to be the united 
strength, almost without exception, of that portion of 
the house with which I usualh^ act. I cannot but be 
aware that in so doing I am liable to become the sub- 
ject of unworthy thoughts, and perhaps of injurious ex- 
pressions and imputations, in quarters where it would 
certainly be agreeable to stand well, and where I should 
much prefer to avoid all collisions. But I cannot, from 
any such considerations, shrink from the responsibilities 
of my office and my position. And if I am told, as has 
been more than once broadly intimated, that gentle- 
men's minds are made up, and that they are not to be 
moved, I answer that I do not admit it. As yet, though 
this measure has been long before the house, we have 
had little or no discussion of the principles involved in it, 

13 



146 

For one, sir, 1 shall not forget that this is a deliberative 
body, assembled for the very purpose of deliberation, of 
discussion, and of debate. I shall not admit that such 
weighty matters as currency and credit are fit to be set- 
tled by any party movement or manoeuvre in the house 
or out of it ; or that it is either creditable or safe to le- 
gislate on such matters upon preconceived impressions, 
however strong, which have not been tested by examina- 
tion and analysis. I shall take it for granted that the 
minds of gentlemen are still open to conviction, as my 
own mind certainly is. On both sides we have un- 
doubtedly our present opinions ; and my anxiety is, not, 
I trust, merely that my own should prevail, but that the 
best and soundest should prevail. I shall state my views 
plainly, addressing myself to the sense and understand- 
ing of those who hear me : and I invite gentlemen to 
the debate. If I am right, I desire to convince others ; 
if I am wrong, I desire to be convinced. Let the argu- 
ment be met and refuted, and I shall be found ready 
and prompt to yield my views and opinions, to the bet- 
ter views and opinions of others. 

There is another topic to which I must here take the 
liberty to advert. The country is in a very disturbed 
slate. It may be said to be passing through the condi- 
tion of almost universal bankruptcy. It is now nearly 
a year since the banks suspended specie payments. In 
the mean time a steady effort has been made, in this 
atate, to bring about again a sound and healthy state of 
things. The banks have perseveringly looked to a 
period of resumption within the year, and now just at 
hand. In this operation the currency has been con- 
tracted, prices have tended downwards, business has 



147 

been paralyzed, and men are everywhere looking around 
them for some means of relief, some way of escape from 
the crushing pressure of the times. They are not con- 
tent to wait for the operation of natural causes, or the 
result of any prescriptions for political ills which do not 
promise an instantaneous and miraculous cure. Now 
many persons see in a general banking law the certain 
means of present relief Their plans of operation undei 
it are already formed. The bill before us authorizes as- 
sociations for banking, with powers and facilities not 
very unHke those enjoyed by corporations; and there 
can be little doubt that, under it, an institution equally 
valuable and safe may be built up in the city of New- 
York, greatly to the relief and advantage of the com- 
merce and business of the country. Undoubtedly, 
where the true condition of things is understood, where 
the true want of the community is felt and appreciated^ 
and the true way of return to soundness and prosperity 
is discovered and known, the provisions of this bill may 
be used with eminent advantage and with entire safety. 
But this is a general law, and while at one point, and 
in judicious and discreet hands, it may be found to an- 
swer a valuable purpose, elsewhere and in other hands 
it may be found to be fruitful only of evil and mischiei 
This is my apprehension — I may say it is my convic- 
tion ; and I do not therefore feel myself at liberty to 
yield to those strong influences which we know are 
brought to bear upon us all in favor of this measure, in 
behalf of particular interests and particular places, i 
should hope that my sympathies are not less strong, my 
nature not less generous, my disposition to relieve and 
to build up not less fixed and determined, than are these 



148 

qualities in others ; but I cannot consent to aid in pro- 
moting any partial interest, however considerable, at the 
cost of the common safety ; I cannot consent to do even 
a great good at an expense still greater. Others, I 
know, do not see tfie dangers which I think I discover. 
They see very clearly certain advantages to flow from 
the system ; and it is not to be wondered at that they 
should be a little impatient with me for pretending to 
discover mischief where they can find nothing but un- 
mixed good. 

There is still another influence operating on the house 
from another quarter. The burthen of all songs just 
now is the distresses of the times ; and these are times 
when men become patriots at a very trifling cost. A 
judicious exhibition of ready sympathy, a timely lamen- 
tation over common, calamities, with some ingenious 
and plausible suggestions for present relief, will make a 
man's reputation in a day. Unfortunately it happens 
that our patriots have, too often, some personal good, to 
be attained only through their schemes for the public 
advantage. I suppose it will not be unjust or improper 
to say that there is in the community a host of expec- 
tants and speculators, who are anxiously looking to this 
bill to help them out, or to help them on — a host v/hich 
is not unrepresented in the house below this. These 
are persons of substance — at least they esteem themselves 
so — with property in abundance in possession or within 
reach, and which cannot be turned to profit or account, 
only because they lack money. Now the}^ look on this 
bill in a truer light, I think, than some others. They 
see in it a license to men to create their own money, at 
least for temporary use, to any extent to which their 



149 

ability or their credit and ingenuity can supply or com- 
mand the means to make the necessary pledges. The 
passage of such a bill would be a jubilee to the whole 
class of the poor rich ; and hence their patriotic anxie- 
ties are natural and urgent, and are felt of course first of 
all for their beloved country ! They love their party \ 
they love the state ; they love the people. The people, 
moreover, have desired and expect a general banking 
law, and this is a general banking law, and the very 
thing for the people ! 

Sir, I confess it looks a little obstinate in me not to 
yield to the various suggestions and appeals coming from 
so many quarters, out of the house and in it, in favor of 
this bill. Certainly if I had consulted my ease I should 
have yielded long ago. Certainly too, if I could consent 
to stifle my sense of public duty in order to give chase 
to the bubble popularity — that popular favor I meau 
which a breath can blow away as a breath creates — 
I should not stand here to advocate doctrines and opi- 
nions which I know to be distateful, unwelcome, and 
to many I doubt not odious. But I shall do it. Yes, 
sir, I shall do it — and with one only anxiety — and that 
is, by the blessing of God, to bring conviction to the 
honest minds who hear me of the indispensable neces- 
sity of changing, at least in one essential particular, the 
character of this measure, before it shall be given to the 
community, in order to arrest a deep calamity to the 
state, which otherwise, in my judgment, will certainly 
be inflicted upon it. 

Before proceeding with my principal purpose in this 
discussion, I will take leave to submit, in a very brief 
way, what I have to offer on my proposition requiring 
13* 



150 

the bankers under this law, whose offices may be situ- 
ated elsewhere than in the city of New-Yoik, to see that 
their bills are kept at par in that city. This proposition 
looks simply to uniformity in the currency. I hold it 
to have been^ and to be, the duty of the general govern- 
ment to provide for the country a uniform national cur- 
rency : such a currency, I mean, as shall be of equal 
value in every part, and in the most distant parts of the 
Union ; such as shall command the same sum in gold 
and silver in the extreme north as in the extreme south, 
in the extreme west as in the extreme east. This is a 
duty which that government can perform, because it is 
one which it has performed. But unhappily that duty 
has been wholly abandoned. The existence of the 
power even, to regulate the currency, is denied and dis- 
claimed. In this state of things, I am of opinion that 
the obligation on the several states, always strong, is 
now doubly so, to make their local currencies uniform 
within their respective limits. I know of nothing more 
discreditable to a highly commercial community than 
voluntarily to forego the advantages of a uniform me- 
dium of payment and exchange. Neither the business 
operations, nor the moral habits of a people can be steady 
and sound without it. Whatever is used as money 
should always, as far as possible, have a steady and 
uniform value ; otherwise, prices will fluctuate, contracts 
will be varied, and profits and property become unstable, 
uncertain and precarious. The precious metals have 
been selected as the universal standard, chiefly because 
of this very quality of uniformity of value ; and there is 
in truth no more difficulty, if government would do its 
duty, in keeping bank paper, really representing the 



151 

precious melals, at a imiform value, than there is in re 

gulating the vahie of coins themselves. 

It is a little singular that it is only within the last 
year, and while we have been using, by necessity, an 
inconvertible medium, that this state has ever been 
blessed with a local currency of uniform value. This 
was brought about by a provision of law, of doubtful 
validity, compelling the banks to tak« each others bills 
at par in payment of debts : that provision leading to 
an arrangement by which the bills of all the country 
banks became current in the city at the same value as 
they bore at the counters where they were issued. Be- 
fore this, a dollar of country paper was not a dollar of mo- 
ney in the city, but something less : and to this extent 
such paper had not that quality of money which all pa- 
per ought to have. It is certaiTily to be desired, in my 
-estimation, that a return to this loose condition of things 
should be prevented ; and as we are now about to devise 
another and a new system of banking, I am anxious 
chat the new issues at least shall have the character of 
uniformity. This is easily accomplished, and accom- 
plished without any serious hardship or burthen any- 
where. City paper is at par throughout the country, be- 
cause it is in demand for remittance and payments. 
Not so with country paper in the city, nor can it be, so 
long as the course of trade remains what it is. The 
csise can only be reached by legislation, for the country 
banks will not be at the trouble, or charge, of keeping 
their bills at par and preserving their money character 
in the metropolis, so long as the people can be made to 
bear the loss of their depreciation and discount. But let 
the banks be compelled to employ a portion of their city 



152 

funds, necessarily there in the course of trade, in the re 
demption of their paper afloat there, and the whole evil 
is at once cured. The profits of banking in this state> 
especially in the country, will be found to be large 
enough, though diminished in this way by a trifle. 
Nor do I deem it certain that any diminution of profits, 
on the whole, would follow from this regulation. There 
is and will be in the west, beyond the boundaries of our 
own state, a constant demand for a cash medium for re- 
mittance to the city of New- York, and if the bills of our 
country banks can be made such a medium, those banks 
may in some good degree supply that demand, and thus 
enjoy the benefits of a more extended circulation. At 
any rate, be the profits of banking a little greater or a 
little less, that is not, I trust, our chief concern : and I 
hold it to be the sacrecf duty of this legislature, when 
providing for issues of paper to circulate as money, to 
provide also that such issue shall he money and not 
merchandize, wherever they may circulate within the 
state. This can only be done by some such legislation 
a» I have suggested. 

But I leave this topic, to go to the more important 
and pressing business in hand. When statesmen and 
legislators propose a new measure of general import and 
application, it is to be presumed that they have in view 
some well defined object of practical benefit to be ac- 
tomplished by it. What is the object in the measure 
now under consideration ? It is very plain and easily 
understood. We mean to break down whatever there 
there may seem to be of a monopoly character about 
the business of banking in this state. We mean to put 
&n esid to the disgraceful scramble, heretofore exhibited. 



153 

for bank charters, and for bank stocks, with all the mo- 
ral and political corruptions which have attended the 
whole subject. But we do not mean, directly or indi- 
rectly, to break down and destroy our present system of 
banking, and build up another on its ruins — at least, if 
there be any such design, I am not privy to it. I sup- 
pose our object to be, plainly and simply, in passing a 
general banking law, to establish an auxiliary system 
to the one now existing, not an antagonist one, for the 
supply of capital and currency to the people of this state. 
In this object I most heartily concur. 1 see no difficulty 
in reaching the object, on sound and safe principles, and 
I see in its accomplishment the certain means of en- 
couraging the industry and promoting the prosperity of 
the state. 

But it becomes an important inquiry whether, in the 
pursuit of our object, we are about to employ a safe and 
judicious plan of operations, or one utterly unworthy and 
imsafe — whether, in short, w^e are in the right way, or the 
wrong. And this is a point which it is impossible to un- 
derstand, as it seems to me, unless we will be content to 
pause a little, and recur to some very plain elementary 
principles connected with the subject in hand. I do not 
mean to inflict on the house a dissertation on political eco- 
nomy ; but I desire to recall to the recollection of gentle- 
men some few simple truths ; some few well-ascertain- 
ed and settled laws, not the worse certainly for their 
scientific character, but which are equally maxims ol 
common sense and common experience, though de- 
veloped only after investigation and study, and which 
are not unessential to be remembered when we would 
legislate undestandingly and well, on such deep and de- 



154 

licate matters as currency and credit. Let me say, also, 
that in recurring to the truths and laws alluded to, we 
have nothing to do with mere theories, whether my own 
or belonging to any body else. The doctrines belong to 
no individual and no name, any more than do the laws 
of nature herself. Like the doctrines of the Baconian 
or Newtonian philosophy, they are universally acknow-. 
ledged wherever they are understood, and no writer or 
speaker at the present day, in any country, of admitted 
reputation, is found to deny or to doubt them. And I 
should feel ashamed to dwell upon such undisputed topics 
at all, if I had not discovered, as I think, in various respec- 
table quarters in this house, either a total forgetfulness of 
settled principles, or a disposition to scout and discard 
them. 

Keeping in mind then the great object we have in 
view ; that we propose to promote the common prospe- 
rity, by affording further facilities for necessary supplies 
through the medium of banks ; let us inquire how we 
must proceed, according to known laws, to effect our 
purpose. When we understand clearly what capital is, 
what credit is, and in what manner profits and wealth 
are produced, we shall then be prepared to understand 
how it is that banks are of such eminent utility, and 
on what terms they ought to be established and encou- 
raged. We shall then see, too, whether our present pro- 
ceeding is altogether on the right foundation, and calcu- 
lated to afford the best advantages to the community. 

We hear so much of banking capital, and the neces- 
sity of increasing it, that it is worth while to inquire what 
capital is, in order that we may understand, amongst 
other things, whether there is really any thing uncom- 



165 

mon or magical about banking capital to distinguish it 
from all other capital, as many seem to suppose. Capi- 
tal, as considered in connexion with industry, has been 
found to consist, 1st, of the materials on which labor or 
skill has conferred, or is about to confer, additional va- 
lue : 2d, of the instruments and tools employed and used 
in the application of labor and skill to materials ; and 
3d, of the means of subsistence to the beings employed 
in performing and conducting the operations of labor. 
It is supposed that in that enumeration is comprised 
every thing which can properly bear the name of capi- 
tal — every thing which goes to make up individual pro- 
perty, or national wealth. 

Take a familiar example by way of illustration: 
The manufacturer has for his materials, his cotton, his 
wool, his wood, or his iron, as the case may be; for in- 
struments, he has his factory or workshop and machi- 
nery ; and for subsistence he has his food, clothing and 
shelter for himself and his workmen. In the same way, 
the capital employed by the mechanic, the merchant, 
the farmer, the professional man, may be easily ascer- 
tained. 

Money in actual use as such, that is, in making ex- 
changes of values, is capital, and falls within the class 
of instruments employed in facilitating the productive 
operations of industry upon materials ; and thus used, 
it is, like other instruments and tools, indispensable, but 
at the same time in itself utterly unproductive. But I 
shall have more to say of money by and by. 

In connection with this view of capital, it will be con- 
venient to understand also what credit is — what the 
credit system is, of which so much is oow-a-days wriltea 



166 

and spoken, said and sung. Credit is the trust, or con- 
fidence, which one individual reposes in another, upont 
the transfer or assignment from the one to the other of 
money or other property by way of loan. The lender 
gives the credit : the borrower obtains it. 

The manufacturer of cotton cloths, for example, may 
have skill and industry for this particular calling, and 
he may have some capital, yet not as much as he could 
profitably employ. In the way of materials, he may 
require more cotton } or in the way of instruments he 
may have occasion for more machinery ; or in the way 
of subsistence, he may want food and clothing for more 
laborers. Not owning these things, and not having the 
means of purchasing, he must borrow, he must obtain 
credit, and be trusted for a return, until he can realize 
the fruits of his operations. So the agriculturist, having 
his land, and skill to work it, may have no seed corn ; 
or having this, he may want the necessary utensils and 
animals ; or possessing every other requisite, he may 
lack the means of living, in the mean time, while he is 
tilling the soil and waiting for his crop ; and in either 
event, if he has not the means of buying, he must re- 
sort to his credit and obtain whatever he wants upon 
that. In the same way, the merchant and the mecha- 
nic become borrowers of capital, on which, or with which^ 
they employ their skill and their industry in the produc- 
tion of profits. 

An apt illustration of the advantages of borrowing 
may be found in our state works of internal improve- 
ment — a case, by the way, which illustrates also, most 
forcibly, the difference between us and other nations in 
the use which is ordinarily made by the governments of 



157 

borrowed capital, as well as in the application which in- 
dividual capitalists in these respective countries usually 
make of their surplus means. It will be sufficient to 
instance the public canals of this state to shew the pro- 
fitable employment of our public credit : works in which 
many millions of borrowed capital have been consumed, 
and which, in so brief a time, have yielded profits not 
only to pay the interest of the debt, but enough to can- 
cel also the debt itself, and leave to the state a clear and 
unincumbered property of almost inestimable value. 
By borrowing abroad, the capital here, in individual 
hands, was left for employment in personal business and 
individual enterprise ; and by borrowing to expend in 
the construction of public works of great utility and 
profit, instead of borrowing, as other governments have 
done and still do, to consume in wasteful extravagance, 
in the support of armies, and in the conduct of war, the 
advantage and gain to the country have been incalcula- 
ble. 

And this leads me to speak of the production of wealth, 
which is only the aggregate of profits resulting from the 
application of labor and skill to capital. The great use 
of capital, in an economical point of view, is to supply 
industry and skill with the means of profitable occupa- 
tion ; and this is the great use of credit and the credit 
system. Labor can afford to borrow capital and pay for 
the use of it, because when the result is realized, the 
capital borrowed may be returned to the lender with in- 
terest on it, and the borrower still retain a valuable com- 
pensation for his labor. In this country, we abound in 
industry, skill and enterprise ; but these can accomplish 
little without materials, without instruments, withoiU 

14 



159 

subsistence — in short, without capital. Capital is what 
we want, and it is what is not to be found in any abund- 
ance among ourselves. Nobody has capital to lend un- 
less he have a surplus — capital, already prepared for pro- 
ductive employment, which the owner cannot use, or 
consume, at least with advantage or economy. Some 
surplus capital undoubtedly w^e have at home — indeed 
we have much considering the age of the country — 
but we have not enough ; and hence, as a people, we 
are largely borrowers from other and older countries, and 
if we are wise we shall long continue to be borrowers 
from countries where surplus capital abounds, where it 
is seeking investment, and where of course the rate of 
interest is low. 

Probably not another country that the sun shines up- 
on, ever made so rapid an advance in wealth as this 
has. And it is not difficult to account for it. We have 
taken possession of a new country, where the elements 
of wealth existed in unexampled profusion : we had only 
to seize them, to take possession of them at little or no 
cost, and realize the largest returns from the smallest 
possible outlay of labor and capital. To allude only to 
our interminable forests, our virgin soils, our swarming 
fisheries, our noble water courses and our water power 
— these alone, placed almost without expense in the 
hands of a people who, by education and habit, make 
a pastime and pleasure of diligence and toil, are enough 
to account for much of what seems really wonderful in 
the rapid advance we have made. An important item 
in the amount is no doubt, to be found in the astonish- 
ing enhancement of value, often of several hundred 
per cent, in a few short years or months, in the native. 



169 

and as yet perhaps unemployed capital of the country, 
^uch has been the case with our lands, cultivated and 
uncultivated : with the sites of business or habitation in 
our cities and villages, often springing up suddenly in 
the very midst of the wilderness : and with innumerable 
localities on our streams and rivers, coming into demand 
for mechanical and manufacturing purposes. But, after 
all, much, very much of our present prosperous condi- 
tion is to be traced directly and distinctly to the effect cf 
the credit system— used, undoubtedly, with more libe- 
rality, and more extensively, among us than among 
any other people that ever existed. I have not a parti- 
cle of doubt that, considering the limited amount of sur- 
plus capital amongst us, less of it has been wasted, less 
hoarded, and more loaned and productively employed, 
than anywhere else on earth : and, moreover, what is 
much to the purpose, and creditable alike to individual 
character and the character of the country, a vast pro- 
portion of this business of lending has been done on the 
faith and confidence alone of the skill, the industry, the 
integrity and the intelligence of the borrowers. 

The business of borrowing, moreover, is done at unu- 
sual profit with us, because of the extraordinary inge- 
nuity and invention displayed by our people in the dis- 
covery of nev/ elements and new combinations of power 
in nature, and the art and energy exhibited by them in 
putting all these into active requisition in the performance 
of physical labor — increasing and multiplying motion 
and force every where, and in all kinds of business, to 
an incalculable degree, and yet at very small cost. 

In these pecuharities of our condition, and in the free 
use of the credit system, lies in truth the secret of our 



160 

general prosperity — the secret of those almost magic 
changes which this country has undergone and is un- 
dergoing. These causes well considered, we need not 
wonder at the unexampled increase of private fortunes 
and of national wealth among us ; at the extent to which 
our waste lands have been cultivated : the number of 
our roads and bridges, our canals and railways ; the 
crowded and profitable occupation of all our rivers ; our 
comfortable dwellings ; our flocks and herds ; the faci- 
lity and rapidity with which our mighty forests have re- 
ceded before the march of improvement and cultivation 
from the Atlantic border to the almost limitless West, 
and a vast country, but just now savage and wild, re- 
claimed to the dominion of civihzed man and converted 
into beautiful fields and blooming gardens, dotted with 
manufactories, where the elements, and agencies the 
most powerful and subhme, are working with man and 
for man, and studded with smiling villages and busy 
cities, the peaceful yet thronged and wealthy marts of 
trade and commerce. 

But though much has been done, much remains to be 
done. We must still be borrowers. Other rail-roads and 
other canals must be made. We have a widely extend- 
ed territory over which transportation is to be conducted. 
The amount of property to be exchanged is accumulat- 
ing every day. We must increase the number of our 
manufactories and mechanical employments. There is 
yet a vast amount of capital now idle, which is only 
waiting for the hand of labor to make it productive and 
profitable ; we have fertile lands waiting to be cultivated : 
water power waiting to be employed ; and mines of lead, 
iron, copper and zinc, waiting to be opened and wrought. 



161 

We must put new labor, new hands, new engines andl 
machinery into operation ; we want them at work on 
the water and on the land, and in the bowels of the 
earth ; and for this purpose more capital must be em- 
ployed ; we must go on with our system of borrowing, 
and a more extended use of credit. 

And now, Mr. Chairman, we may be prepared to 
turn our thoughts to banks, to see what banks are and 
how they operate, when they operate well, to supply in- 
dustry with capital and to give extension to the credit 
system. And here I beg leave to remark, that it is now 
about sixty years since the secrets of banking were pe- 
netrated, and whatever there was of mystery about it 
completely exposed ; and nothing can be more silly, at 
this time of day, than for persons to look wise and set 
up pretensions in this matter, as if they had made dis- 
coveries and were possessed of knowledge concerning 
the business of banking of which the world has hitherto 
been quite ignorant. There are those connected with 
banks, who sometimes exhibit a great deal of small wis- 
dom on the subject ; and verily believe that their skill 
in the mechanical working of a bank, and their ac- 
qaintance with its details, are enough to make oracles of 
them, even when the question is one which concerns 
the state, and the whole body politic, relating to currency 
and finance, and the public prosperity as connected with 
them ; and the wisdom of such persons is not the less 
profound, in their ovi^n estimation, tliough they have 
never given themselves the trouble to understand the 
commonest principles belonging to the subject. There 
are others who, from some restless desire to be foremost 
in all good works^ or else from a love of speculation, oe^ 



162 

from some other equally worthy impulse, turn reformers, 
and offer us various ingenious devices for improving the 
currency. Sir, for one, I have no faith in experiments 
on the currency, and no attempts in this way, of a re- 
cent date, have given me any new confidence in them. 
Nor, on the other hand, have the signal failures which 
have attended all such attempts, nor the distresses into 
which the country has been thrown in consequence of 
them, weakened at all my trust in banking as an indis- 
pensable agent of prosperity in all mercantile and busi- 
ness communities, and in the superiority of a bank-note 
circulation over any other that ever has been, or can be, 
devised. But then, I think, of course, that banking 
should be conducted on plain, simple, and well-under- 
stood principles ; that thus conducted it is entirely safe, 
and otherwise it is entirely unsafe, and generally to the 
last degree mischievous. 

The business of banking, at this day, is usually con- 
ducted in two principal branches — loaning capital, and 
issuing currency. Nearly all the banks in this country 
are both banks of loan, and banks of issue. The ope- 
ration of a bank of loan is exceedingly simple. Such a 
bank, owned at home, of course adds nothing to the 
actual capital of the country. It serves simply to collect 
and distribute a portion of such capital, and this is a ser- 
vice of immense importance. The capital of the bank 
consists in a certain amount of surplus property belong- 
ing to the respective owners. Whatever that surplus 
may have been in the hands of the original proprietors — 
materials, instruments, or food and clothing — cotton, 
wool, grain, iron, leather, coal, wood, lands and build- 
ings, implements and tools of trade, the products of the 



163 

soil, the stall and the loom — every thing, having beeiQ 
exchanged for cash, goes into the banks in the shape of 
money, as the representative of so much value of capitalj 
and as the most convenient form for putting out on loan. 
In this shape it is borrowed, and immediately again ex- 
changed, by each borrower, into such property, or capital, 
as is suited to his particular occupation and wants — ex- 
cept, perhaps, some small portion of it which may be 
preserved for necessary use as tnoney. I speak of course 
of the case of loans to the business part of the community, 
and without reference to instances which may seem to 
form exceptions to the general practice. It is, then, let it 
be remembered, capital, according to the true meaning of 
the word, which is really loaned by these banks ; it is 
not money, in any other sense, than as money is the 
representative of capital, and may always be readily ex- 
changed for it. It is not money which the manufactu- 
rer or mechanic wants ; it is cotton, or iron, or leather, 
or wool. It is not money which the merchant-miller 
wants ; it is wheat, and he could not grind up and bolt 
the cash for the market with any great profit, if he were 
to make that experiment. Money is the convenient agent 
by which capital and labor are brought together — it is 
the priest performing the marriage ceremony, but not 
entitled to claim quite all the credit for the fruits of the 
union — which are profits and wealth. 

Banks of loan do not, as I have said, when owned 
wholly at home, add any thing to the actual capital in 
the country. They do add, undoubtedly, to the capital 
actually loaned, because they serve to gather in for that 
purpose, much that would otherwise be idle, and finally 
wasted by being unproductively consumed. But when 



164 

the capital stock of such banks is owned abroad, there 
is just so much actual and loanable capital added to the 
amount already in the countiy ; and so long as the pro- 
fits of labor bestowed on borrowed capital, shall exceed 
the rate of interest and expenses paid for it, so long will 
it be good policy for us thus to continue to borrow from 
other countries. 

It is of some importance to bear in mind also, what 
one of the principal actors in bringing forward and sus- 
taining this bill, and with whom I have conversed re- 
cently on the subject, seems to find it very hard to com- . 
prehend, that the amount of money loaned to and in 
use by the community, is by no means increased in equal 
proportion to the amount of capital collected in new banks 
and put out on loan. The increase of real banking ca- 
pital does not necessarily increase the quantity of circu- 
lating medium actually employed, except only as the 
greater number of exchanges which increased activity 
in business requires, demands a proprtionably greater 
amount of the common medium by which such ex- 
changes are made. When the banks in this state, on 
the first of January last, had sixty millions on loan 
in the hands of the community, the whole amount of 
money in circulation, of every description, did not pro- 
bably exceed fifteen millions of dollars ; and I suppose 
it would be quite possible to add to the loans to any de- 
sirable extent, without materially advancing the ratio of 
circulation. 

But, Mr. Chairman, let us now see what we can make 
of banks of issue, and whether we fiilly understand 
their operation and eflfect. Banks, as they are constitu- 
ted in tins country, not only loan capital, but they also 



165 

create and loan currency. What then is currency, and 
what relation does it bear to capital ? Is it true, that in 
order to supply borrowers with capital, nothing more is 
necessary than to set to work to create and put out cur- 
rency 1 If so, then it is indeed shameful that any coun- 
try should ever feel the want of capital ; if so, then I 
grant that this bill has been conceived in exactly the 
right spirit, and proceeds on the right hypothesis. Bank- 
notes being money, and money being capital, increase 
bank-notes and you increase capital. This is short rea- 
soning, and I have no doubt to many quite conclusive. 
According to my simple apprehension, a bank-note 
currency, when issued, is used, in the place of an equal 
amount of coin, as money, and so long as it remains in 
circulation is onli/ money and that continually. As 
the representative of coin, it performs the office of coin, 
both as a measure of values, and as a medium or instru- 
ment for the exchange of values. As an instrument of 
exchange, it is like all other instruments — its importance 
and utility are wholly relative — and whether you want 
more or less of it will depend on the amount of work 
you may have to be performed by its means. The 
smith does not w^ant two forges to work up a given quan- 
tity of iron which can as well be done in one. If the 
weaver have a given quantity of w^oollen yarn to be wo- 
ven, and one loom will do it in a given time, he will not 
set two looms in operation to do the same work, in the 
same time. If one yard stick will measure one hundred 
yards of cloth in ten minutes, it would be quite useless 
to employ ten yard sticks in ten different hands, to oc- 
cupy the same time, in performing the same work. And 
30 with exchanges of values by means of money. With 



166 

a given sum, a certain number of exchanges may be 
made ; and hence it is found that the sum of all the ex- 
changes in a business community, according to the 
amount and activity of its business, requires for that 
purpose a certain amount of money. The ratio has 
been differently computed ; but unquestionably there is 
a point beyond which the community cannot go in the 
use of money in business, either with economy or with 
safety. Circulation has been estimated, by reference to 
the whole amount of capital in a country, and also by 
reference to the amount of annual income. In Great 
Britian the proportion of circulation to capital has been 
computed by some as one to fifty, and by others as one 
to one hundred and twenty-seven. The proportion to 
annual income has been supposed to range from one to 
ten, to one to twenty. But it is not so important to find 
the true ratio in either case, if that were possible, as it is 
to be made sure of the fact that an amount of money, 
comparatively small when considered in relation to capi- 
tal or income, not only suffices for the uses of business ; 
but is really all that can be employed. 

When the currency is full, that is to say, when there 
is enough of this medium or instrument abroad, if kept 
active, to perform all the exchanges required to be per- 
formed in the prosecution of the business of an indus- 
trious, skilful and enterprising population, then both 
economy and safety require that no more should be 
added. After that, every addition, if it benefits indivi- 
duals, does so at the public cost, and can only be pro- 
ductive of general mischief. If the currency in any 
community is full with twenty millions in circulation, 
the addition of ten millions can only have the genera? 



167 

effect to knock down the price of the whole currencyj 
as compared with other things, until the thirty millions 
shall be worth no more than the twenty. It is a good 
enough operation for lenders, for the time being, but 
positively ruinous in the end to borrowers. 

It is true, that the currency of a commercial country, 
keeping up an active commercial intercourse with other 
countries, cannot long continue in an inflated condition, 
if such currency be either specie, or bills convertible into 
specie. A foreign demand for specie will be created, 
which will begin to flow oflf to places where it bears bet- 
ter prices than at home ; the currency will begin to be 
contracted, and through ruinous fluctuations in property 
and universal distress — perhaps through suspension of 
specie payments — the evil will at length be cured, and 
the country return to sound and healthy habits. 

We may now see Mr. Chairman, exactly the use of 
Banks of issue, and just what they are worth. They 
are valuable institutions, and no commercial community 
can get on without some contrivance of the sort ; but 
care must be taken that they do not attempt to take the 
place and perform the functions, by way of substitute, 
of banks having capital to loan, and loaning capital ac- 
cordingly. They are useful and indeed indispensable, 
so long as they confine their operations to the issuing of 
currency, to the extent only to which money, or cir- 
culation, is really required; the instant they pass be- 
yond this line, they do nothing but inflict on the com- 
niunity positive injury. 

The use of bank-note money is to represent and take 
the place of the precious metals in circulation, and it is, 
beyond all question, the cheapest, the raost convenient, 



168 

and the best money which a commercial country can 
use. The principal pecuniary advantage of paper, 
however, is easily calculated. Money, when in use as 
suchf is in itself utterly unproductive. If materials of 
value be used like the precious metals, then it is so much 
dead capital, necessary indeed, if a cheaper substitute 
cannot be found, but still used at a dead loss — precisely 
as if all our dry-goods dealers were to take a fancy to 
use only gold and silver yard-sticks, instead of wooden 
ones costing little or nothing. The substitution of pa- 
per for metal as money, simply has the effect to release 
from an employment in which they earn nothing, 
and, at the same time, are rapidly losing value from 
wear, articles of great intrinsic value, which may now 
be made productive in the same manner as any other 
capital. 

To illustrate this position, let us suppose the case of 
a silver-smith employing a certain amount of that metal 
in the profitable business of manufacturing silver ware. 
In the absence of paper, suppose he finds it necessary to 
employ also, in his business, ten thousand dollars of 
silver as cash, or money. Give him now the chance of 
borrowing ten thousand dollars of paper, which will an- 
swer his purpose as money equally well, and let him ap- 
ply his silver dollars to increase his stock of ware for 
market. It is clear that his personal advantage will be 
equal to the difference between his profits on his work, 
and the interest he may pay for his money ; while the 
advantage to the community will be equal to the clear 
profits, provided only that the bank, receiving the in- 
terest on the paper, is owned at home and not abroad. 

Here then i» a direct pecuniary benefit to be derived 



169 

from banks of issue. If owned by our own citizens, so 
that the interest is saved to the community, the benefit 
is equal to the profits which the community may make on 
so much productive capital as is represented by the paper 
in circulation. If the currency in this state, in ordinary 
times, is twenty millions, and fifteen millions of that 
amount is paper, and the annual profits of capital produc- 
tively used are ten per cent, then are the people of this state 
made richer every year, in this way alone, by the sum of 
a million and a half, by the use of so much paper. So 
much for this direct saving by the use of a paper cur- 
rency, and for the proper functions of banks of issue : 
and if the view here presented could always be kept in 
mind, by those who deal authoritatively on the subject, 
the system might always be a safe and profitable one. 
The danger arises from the temptation to push the sys- 
tem beyond its sphere. Men will not remember the true 
uses of money; that from its very nature, its constitu- 
tion and office, it requires to be limited in quantity ; that 
it can never be judiciously or profitable increased beyond 
the natural demand for the legitimate purpose to which 
alone it can be applied ; and that in every respect the 
law of money is the same, whether it exist in the shape 
of metal or in the shape of paper. 

And now, Mr. Chairman, after having been so long 
engaged, 1 hope not wholly without profit, in looking 
into general principles, we are prepared perhaps, to see 
what we want, in the way of banks, and also what we 
do not want. 

We have undoubtedly in this state at the present 
lime a contracted currency. But if present relief from 

15 



170 

the immediate pressure under which the country is la- 
boring, be any part of our object, we shall not gain that 
object, in my opinion, merely by providing new sources 
for the issue of paper. The present banks can issue pa- 
per as well certainly as any new banks that may be form- 
ed ; but the present banks are steadily preparing for re- 
sumption, and nobody, I believe, proposes that our new 
banks shall begin with issues not purporting to be re- 
deemable in specie on demand. Looking to the period 
of resuming, we may expect that for some time at least, 
the circulation will continue to be contracted. The 
banks will not put out bills in profusion in the face of ap- 
prehended demands for specie. They will feel their 
way gradually, and come up to their wonted limits only 
after they shall find the accustomed confidence of the 
community fully restored. No banks, however framed, 
could do more than this. It is not in times of distrust 
and general suspension that banks, however plausibly 
contrived to secure bill-holders and win public confidence, 
can safely venture to cast abroad a full supply of bank 
paper, unless indeed the intention be themselves to fall 
back on suspension with the earliest opportunity. I 
conclude that the banks contemplated by this law, will 
no more be able to furnish a fresh supply of currency, 
in the present emergency, than the old banks are, or will 
be, without them. 

But in offering to the state a general banking law, 
our purpose is to offer a system which will work benefi- 
cially, not at one time merely, but at all times. And 
considering the present scheme in this point of view, it 
seems to me that quite too much effort is expended ins 
in preparing the way for new issues of paper. Indeed^ 



17i 

to my mind it is quite apparent, not only from the gene- 
ral frame of this bill, but from the manner in which ii 
has more than once been stated on this floor that its sup- 
posed benefits were expected to accrue, that the leading 
and governing impression of its friends is, that what the 
country mainly wants, to promote its steady growth and 
prosperity, is a permanent increase of currency. We 
want, say they, more banking capital, and this want 
they suppose will be abundantly supplied, by authorizing 
banks to issue currency at will, without having one dol- 
lar of actual capital to loan to the community ! In no 
part of it does this bill require, or even contemplate, that 
the banks, created under it, shall possess a shilling of 
loanable capital. On the contrary, the plan is, and every 
thing is contrived with reference to it, that whatever capi- 
tal a bank shall possess, instead of being loaned to any- 
body, shall be locked up in pledge with the comptroller, 
as the condition of its right to issue currency. The no- 
tion entertained evidently is that currency is banking 
capital, and that when you have provided for an inde- 
finite supply of currency, the want of capital can no 
longer be felt. I hope, before we have all done with 
this subject, (hat gentlemen will consent to come back 
to juster and safer sentiments than these. 

In all my remarks on this subject, I trust I shall noL 
be so far misunderstood as to be thought, in any man- 
ner, opposed to a general banking law, or to giving to 
all persons the same authority, under proper regulations, 
to issue paper. I am decidedly in favor of such a law, 
and I see no difficulty, and no danger, in such a course. 
But then I do not think that currency is all we want, 



172 

or that it is our chief want ; nor can I fall deeply in love 
with any law framed on such a supposition. 

On the supposition that our new banks are to be 
merely banks of issue, it is easy enough to compute, 
very exactly, how much the community, for I do not re- 
gard the benefits to the bankers as the principal thing, 
is to be benefitted by them. The banks now existing 
in this state have authority, even under the restriction 
of the suspension law of last May, to issue something 
more than twenty-nine millions of dollars. How much 
currency the people of this state can use, in the most 
active and busy times, I shall not undertake to say ; but 
we know about how much they have used, when they 
had probably quite as much as their business would 
bear, and as much as the banks dared to, or could put 
out. The highest point to which their issues have ever 
attained was some short time before the suspension last 
spring, when they amounted to about twenty-four mil- 
lions. The bank commissioners tell us, that, with the 
present amount of capital, their issues, in ordinary times, 
will probably be less than twenty millions. A calcula- 
tion founded on the estimated ratio of circulation to capi- 
tal, or to income, would give a result considerably be- 
low this sum. Ten dollars of money in use to each per- 
son, including women and children, has been thought 
by many to be a large estimate, and this Avould make 
twelve millions or a little more, a full currency for the 
people of this state. Double the sum, and it would not 
equal the present capacity of the banks to furnish the 
full supply. 

If then we cannot use as money, in this state by any 
possibility, a currency of twenty-nine millions, without 



173 

having a dangerous expansion, and a bubble, will any- 
body tell me how we are to be benefitted as a people, 
merely by establishing new banks of issue, without any 
increase whatever of loanable capital ? Either the new 
banks will supplant the old in this business, and furnish 
all the currency, or they will come in for a share of the 
public confidence and custom. In either event, what 
does the community gain ? And what becomes of all 
those splendid visions, in which gentlemen have in- 
dulged, of new impulse, new prosperity, and unwonted 
glory to the state, from this new creation of banks, 
which, after all, are expected to do nothing but issue 
new currency ? I repeat again, that I am in favor of 
throwing open this business of issuing currency, and the 
reasons for it are strong and obvious enough ; but I am 
unwiUing to see anybody here cheat themselves, or 
others, into rhapsodies about the advantages of accu- 
mulated issues of paper. A grosser delusion never took 
possession of any man's mind, and it shall be my labor 
to dissipate it if I can. At least I v/ill endeavor, as far 
as in me lies, to prevent the mischief which might fol- 
low, if such error were indulged without gainsaying or 
exposure. 

I suppose that what this state really wants is an in- 
crease of loanable capital^ and an e.Tle?ision of the 
credit system. And my difficulty is, that while I see 
in this bill a provision — that which authorizes associa- 
tions for banking — of which advantage may be taken 
for forming associations with loanable capital, and which 
probably will be thus used in the city of New- York, if 
nowhere else — a result which nobody can desire more 
strongly than myself — yet I also see in this bill, as \l 
15* 



174 

seems to me, a strong and ingenious effort made, to set 
up generally throughout this state a system of paper is- 
sues as a substitute for capital, and thus, if the scheme 
should be successful, as it would be full likely to be, to- 
commit an alarming practical error, from the conse- 
quences of which it might take us long years to recover. 
By a brief analysis of that part of the bill which pro- 
vides for issues on a pledge or mortgage of property, we 
shall easily discover what must be the practical working 
of the plan, and whether we are, or are not to be sup- 
plied, under it, with additional capital, and favored with 
new facilities for the use of credit. 

In regard to stock banks, several cases may be sup- 
posed, and I will content myself with simply and plainh^ 
stating the result in each. 

Suppose existing state stocks, now owned by capi- 
talists at home, be pledged for issues : state stocks in 
the hands of individuals are not only a marketable pro- 
prerty, but they will readily command foreign capital ; 
and if sold abroad instead of being pledged at home, 
actual capital would be brought into the country, and 
used, or put out on loan, instead of the currency which 
is proposed to be issued upon it as a basis; while, if 
more currency be needed either generally, or in particu- 
lar places, it is easy to provide for it, with perfect safety, 
without locking up capital. 

But suppose existing state stocks, now owned abroad, 
be brought in, and being still owned abroad, are pledged 
for issues ; nothing of course would thus be gained in 
the way of loanable capital, and to the extent of the 
issues, the interest would be paid abroad instead of at 
home. 



176 

Again ; suppose such stocks, now owned abroad, 
be purchased by our own capitalists, and brought in to 
be pledged by them for issues ; the whole capital thus 
paid for stocks, held by foreigners, would be so much with- 
drawn from the country, and from the industry of the 
country, and we should thus provide for a new issue 
of currency at the expense of an equal amount of capital. 

But we will now take the case of a new creation 
of state stocks, and suppose them to be purchased 
abroad with foreign capital^ and then pledged here, by 
their owners, for issues of paper ; in this case, the state, 
creating the stock, adds to its borrowed capital, which it 
may consume in a productive and profitable manner, as 
in the construction of canals and rail-roads, advancing 
thus the common prosperity ; but individual industry, or 
business, would not in that way acquire any additional 
capital — it would acquire nothing but currency, which 
it already has, or always may have, on terms equally 
safe, and vastly more economical. 

Or suppose, finally, that this new creation of state 
stocks is purchased at home, and so pledged for issues ; 
it is plain, that so much domestic capital which might 
have been loaned to individuals, and thus have gone to 
stimulate and sustain individual enterprise and labor, is 
now loaned to the state, or states, creating the stock — 
it may be our own state, and is quite as like to be some 
other ; and if loaned to other states, then we are wise 
enough to dig their canals and build their rail-roads with 
our capital, and imagine that currency will answer our 
own purpose equally well ! 

The case here put seems to have been the one which 
the honorable chairman of the committee on banks con- 



176 

templated, when his imagination, a few days ago, was 
so strongly fired with the glories of this new discovery 
in banking. He saw in this scheme, an immense sail- 
ing to the whole country, as well as I could understand 
him, in the item of interest. He spoke of a hundred 
millions of state stock, all being owned at home instead 
of abroad, and a consequent saving of five millions a 
year to the country, which must otherwise be sent away 
in the shape of interest. This saving is, of course, to be 
made in only one way ; if the commercial and business 
community, instead of being borrowers, are ready to be- 
come lenders; if they can and will supply the govern- 
ments with all the capital which they would borrow ; 
and then, if they can contrive to add to a full currency, 
millions upon millions of more currency still, and make 
that currency supply to them the place and the uses of 
capital — why the whole thing is done ; a community of 
needy borrowers may at once become a community of 
rich lenders, though without one dollar of property, sur- 
plus or otherwise, more than they had before — interest 
will of course be saved, and capitaHsts may go hang ! 

In regard to the mortgage feature in this bill : the 
effect of pledging lands for issues may be seen at a 
glance. If we could suppose that associations would be 
formed with a cash capital to begin with, which would 
be loaned out on mortgage securities, we might expect 
to realize some substantial advantage from the operations 
of such banks. Though even in such a case, we should 
not have banks making loans on commercial principles, 
but putting out their capital on time, and upon those 
very securities that have heretofore been used most ad- 
vantageously as pledges for private loans. 



177 . 

But 1 apprehend our land hanks \v\i\ not be got up in 
^ny such way, nor is any such thing intended. The 
share-holders of these banks, so far as land or mortga- 
ges are used, will be the owners, at least they will be 
the holders, either of existing mortgages on lands, or of 
the lands themselves, which are proposed to be pledged 
for issues. In other words, and very plainly, it is not 
proposed or expected, that such banks are to possess any 
loanable capital whatever, or to put out any capital on 
loan, but if banks at all, they are to be banks of issue 
only, loaning currency, and nothing but currency. 

Sir, this is not the first time, by any means, that it 
has entered into the imagination of men, that since pa- 
per has become money, it is quite right that every body 
should be allowed to make their own money, only tak- 
ing care that security be given for its ultimate redemp- 
tion. This is the leading idea in this biil. And under 
it, unquestionably any person of substance, or w^ithout 
substance, if he have credit enough to command a tem- 
porary loan, may, at any time, supply his own necessi- 
ties for ready money, simply by the dash of his own pen. 
To many persons, even of substance. w4ien pressed by 
an urgent call, when a lucky hit might be made, or a 
valuable property saved by it, the temptation to resort to 
the plain suggestions of this bill for supplies, would be 
too strong to be resisted. A man with a little scrip lying 
by him, and some real estate unavailable in any other 
way for raising money, would not be hkely to see him- 
self ruined, in a time of pressure or panic, for want of 
a few thousands, when by turning this property over to 
the comptroller, he could at once lend himself whatever 
he needed. He might have no intention to turn banker; 



178 

that might be the farthest thing from his thoughts; 
but he would meet a present exigency ; he would throw 
out his bank notes as cash ; he would effect a ready sale 
of his stock without sacrifice ; and for his land, he would 
gain time to redeem his mortgage on that, and in the 
mean while make up abundantly any little losses in the 
operation, by buying up his own issues at a discount. 
That such would be the common order of proceeding 
under this bill, I do not pretend to say ; but that undue 
and improper advantages would be taken of its provi- 
sions, and that to an extent injurious to the best interests 
of the country, I have no doubt, provided the bill should 
be suffered to pass in its present shape. 

But, Mr. Chairman, I come now to consider this bill 
in a different point of view. Besides that the bill, so far 
from requiring, does not even contemplate, that the banks, 
generally established vmder it, shall possess or offer to 
the community any loanable capital whatever ; besides 
that it professedly regards the great want of the com- 
munity to be paper and only paper ; it provides for a 
system in respect to issues, in some important particulars, 
entirely new. We are now to leave old landmarks, and 
venture forward where wej at least, have never ventur- 
ed before. And it is not that we are about to throw 
open the business of banking. That has been done by 
former legislation, except in regard to issues only ; and 
we may make this latter branch of the business free 
also, with perfect safety, in my judgment, and without 
resorting to any new and hazardous experiments. It is 
this feature of the present bill, the attempt to put issues 
on a new basis, a basis of property instead of specie, 
which more than anything else makes it objectionable 



179 

to ray mind, and which, unless I can persuade the house 
to admit my amendment, must determine my vote, 
much as I shall regret it, against the final passage of the 
bill. 

When I look at the whole frame of this act, and when 
especially, I consider it in connexion with the ominous 
remarks which have, from time to time, fallen from its 
friends and those who have it mainly in charge, I can- 
not doubt, that it is expected that, in its practical work- 
ing and result, the country is now to be supplied with 
what is called money, to the full extent to which the 
demand for it is at all times known to exist. This mo- 
ney is of course to be paper, and to be dealt out to bor- 
rowers without measure or stint, and regardless of all 
the fatal mischiefs which always follow from an over- 
charged currency, of whatever description it may be. 
I say, sir, that it is expected that bank money shall now 
be created in full profusion. This is precisely the pro- 
mise which gentlemen make to themselves, in proposing 
and sustaining this bill in its present form, and it is pre- 
cisely the result to which they look with equal confi- 
dence and pleasure. Now, sir, I agree with gentlemen, 
in believing firmly that the plan of the bill is admirably 
fitted to bring about the result to which they so eagerly 
look, though I have by no means any sympathy with 
the feelings of hope and pleasure with which they con- 
template the prospect. 

Mr. Chairman, it is my opinion, that this bill contem- 
plates and proposes the estabhshment of banks of issue, 
which will not be very far from being what are well un- 
derstood by the term, property hanks ; and that their 
issues will not in the end, vary in character, v€ry match 



180 

rially, from what are known as hills of credit. I think 
there is an effort here, quite likely to be successful, at 
least for a time, to win the public confidence to these 
issues, without regard to convertibility ; to induce the 
community to look upon them, and that with satisfac- 
tion and favor, as representing property and not coin, 
and thus to give them a character and a currency tend- 
ing to all the evils of undue expansion belonging to 
mere paper-money. 

These issues are to bear, on the very face of the bills, 
two principal features, admirably calculated to gain for 
them favor and confidence, wherever they may go. In 
the first place, they will shew an established connexion 
with the government, which, though in reality only ap- 
parent, will seem to be very important. They are all 
to bear the signature of a government officer, and to be 
known as issuing directly fiom the authority of the head 
of the financial department of the government. And in 
the next place, they are to have, either in whole or in 
part, the actual guaranty of a state government, for their 
redemption. Where this guaranty does not go to the 
full value, the remainder is secured by a mortgage on 
real estate of double the value for which it is pledged, 
perfected under the direction of the same financial offi- 
cer of the government, and for whose faithfulness and 
capacity the state is responsible. 

Now that such paper is to circulate merely on the 
credit of the issuers, and simply as the representative of 
coin, is more than I expect or believe. Nobody, scarcely, 
in a commercial community, wants specie, when paper 
can be had in which all, for the time being, have confi- 
dence. A very brief experiment will be enough to satisfy 



181 

every bold operator in banking, that little or no specie 
need be kept idle in vault. The demand will be for the 
bills, and not for metal ; and this is an appetite that 
grows by what it feeds on. An expansion once begun. 
is sure to go on. The mighty bubble, the great balloon 
made of silk-paper, is constantly swelled out, more and 
more, increasing in volume and losing substance in pro- 
portion, until it is distended to bursting. I would I could 
be satisfied that my apprehensions on this point are un- 
reasonable and unfounded. 

Until now we have had a legal limit to issues. At 
the present moment, if every other restraint was removed, 
bank paper could not be issued quite up to thirty millions. 
It is now proposed to allow issues without limit ; at least 
without any other limit than such as always belongs to 
property banks, that is, the amount of property which 
can be commanded, to place in pledge for eventual re- 
demptions. The ordinary guards thrown around bank- 
ing, even where there is a legal limit to issues, are now 
wholly omitted, when the legal hmit is removed. I can- 
not think that this is proceeding wisely or safely. There 
seems to me to be in this plan every possible facility for 
putting out and keeping out paper, every possible in- 
ducement to do so, and a careful abstaining from what- 
ever might operate as a check to issues. Let us see if 
this be not so. 

We have already seen what provision is made for in- 
spiring an unusual confidence in the paper. I think it 
is also plain, that the bill holds out the inducement of 
large profits to those who may engage in the business. 
Persons owning state stock, and receiving upon it an 
interest of five per cent, can have no possible objection 

16 



182 

to place it in a condition in which, with the aid of pa- 
per issues, it shall produce them ten per cent, clear of al! 
expenses, and without trouble or risk. And the owners 
of mortgages, and of farming and other productive lands, 
will not think it a hardship to receive an income, from 
these sources, of twelve per cent instead of seven. From 
every calculation which I have been able to make, I do 
not see why the ordinary profits of banking, under this 
bill, may not be as great as I have indicated. In any 
event, whatever the respective holders of property shall 
be able to realize, above the ordinary rate of interest or 
return upon such property, be it ten per cent or only 
two, is so much nett gain, and to that extent a strong 
inducement to undertake the business. An interest is 
obtained above the legal rate, without any of the hazards 
or imputations of usury. 

In my study of this scheme of banking I have con- 
sidered carefully the point, what there was, and whether 
there was anything in it, or connected with it, which 
would operate as a check upon issues. If there be any- 
thing, I have not been fortunate enough to discover it. 
Amongst other things, I have tried to satisfy myself that 
there might be something in the character of our people, 
which of itself might be enough to prevent the bankers 
on the one hand, and the borrowing community on the 
other, from running into any excesses in the use of pa- 
per money. All wise men know that the end of excess 
in this matter, is distress and ruin ; but then every man 
is apt to think that, in the general wreck, he will escape. 
I have adverted in my mind to the parallel often drawn 
between the Scotch and Yankee character, in regard to 
habitual caution and discretion ; but I do not find the 



183 

parallel complete. As imputed to the Scotch, whethei 
true or false, Yankees may indulge some habitual dis- 
trust of each other ; but the Yankees have no distrust 
of themselves. In themselves they have the most en- 
tire confidence. They vi^ill take bond of all around 
them, if they can ; but if no security can be had, it is 
no matter, and each for himself, v^ill play at any game 
of chance or hazard, old or new, small or great, in which 
others are willing to engage. To win or to lose, he will 
take his chance in any attempt in which he can find 
anybody bold enough to dare him on. Never was there 
a people more enterprising or more daring. Tell me 
w^hat island there is, to which adventurous navigation 
has ever penetrated in search of gain, which has not been 
trodden by the foot of some son of New-England? 
What ocean, which has not been whitened with his 
sail? Who travels faster, or travels farther than he? 
Who sails faster, or farther? Who encounters labor, 
exposure, fasting, peril, death, with such deliberation 
and coolness as he does, whether led by the spirit of dis- 
covery, or the spirit of benevolence, or the spirit of ad- 
venture and gain ? But it is better to let Burke describe 
him. 

" Look," says he, " at the manner in which the peo- 
ple of New-England have of late carried on the whale 
fishery. Whilst we follow them among the tumbling 
mountains of ice, and behold them penetrating into the 
deepest frozen recesses of Hudson's bay and Davis's 
straits, whilst we are looking for them beneath the 
arctic circle, we hear that they have pierced into the op- 
posite region of polar cold, that they are at the antipodes, 
and engaged under the frozen serpent of the south. 



184 

Falkland island, which seemed too remote and romantic 
an object for the grasp of national ambition, is but a 
stage and resting place in the progress of their victorious 
industry. Nor is the equinoctial heat more discouraging 
to them than the accumulated winter of both the poles. 
We know that while some of them draw the line and 
strike the harpoon on the coast of Africa, others run the 
longitude, and pursue their gigantic game along the 
coast of Brazil. No sea but what is vexed by their 
fisheries. No climate that is not witness to their toils. 
Neither the perseverance of Holland, nor the activity of 
France, nor the dexterous and firm sagacity of English 
enterprise, ever carried this most perilous mode of hard 
industry to the extent to which it has been pushed by 
this recent people ; a people who are still as it were but 
in the gristle, and not yet hardened into the bone of 
manhood." 

For my part, sir, I can find nothing in the character 
of our people, (for we are of the blood of the race just 
now described,) calculated to give me any confidence 
whatever that the provisions of this bill, with all the 
temptations and invitations to abuse, contained in it, are 
likely to be always prudently and safely used. 

But, Mr. Chairman, I have not forgotten that all 
bankers under this bill will be held to pay specie for their 
notes, on demand, under penalty of being proceeded 
against as bankrupts after ten days from refusal. Yet 
as a check upon issues, I regard this provision as being 
likely to prove delusive, and nearly useless. And I think 
I cannot be mistaken in supposing that this opinion of 
mine is not at variance with the opinions of the friends 
of the bill. I put it to gentlemen plainly to say, whe- 



185 

^her it be not one principal object on their part, to make 
snich a show of property security to the bill-holder as 
will have the effect to take away from him all disposi- 
tion ever to test the question of convertibility by demand- 
ing the specie? Is it not a part of the design, that 
banks thus constituted will be able to maintain a circu- 
lation which no other banks could ? But whether there 
be any such intention or not, I cannot doubt that such 
would be the effect. The issues would not be regarded 
in any respect as representing coin, but as representing 
property — property pledged for their redemption — proper- 
ty of such a character that it may be thrown into mar- 
ket, and the value realized, with little sacrifice and small 
delay. 

Mr. Chairman, I should be glad to know if I am re- 
ally so much in error, in regarding the proposed banks 
rather in the light of property banks than of ordinary 
commercial banks, nnd in believing that their issues 
will have more the character of bills of credit than 
of convertible bank paper? I pray the committee to 
indulge me in a little further examination of this mat- 
ter. 

What is it which constitutes the characteristic diffe- 
rence between bills of credit — mere paper money — and 
^convertible bank-notes ? Nobody doubts that there is a 
difference — in what does it consist ? A convertible note 
must, of course, be payable on demand, and in coin ; 
but are all notes, thus purporting to be payable, conver- 
tible notes? I think not, and there are many instances 
€o prove they are not. Convertible notes are really and 
truly the representatives of coin; and if they are not, 
they are not fit to be called money. If they represent 

16* 



186 

credit, or property ; if they circulate merely on the faith 
of the ability of the issuers ultimately to redeem in va- 
lue, then they are not strictly convertible paper, but are 
properly bills of credit. Such was the old continental 
money, payable on the face of it in specie on demand, 
but circulating really on the credit of the country : and, 
to give a fresher instance, such has been, and is, all our 
bank money since the suspension of specie payments. 

The theory in regard to bank paper is, that the coin 
is supposed to be all in vault, and the bills are only 
tickets, certifying that the holder has so much coin in 
deposite, to be had of course for the asking. Every bo- 
dy, indeed, who takes the trouble to think about it, knows 
that the fact is not so, and yet, in every sound bank, 
the principle is faithfully preserved. If ten depositors 
put in bank each a thousand dollars in coin, taking back 
paper for it, and of course with the right to draw upon 
the specie fund from time to time, in the course of busi- 
ness, it may very likely be found, after a little experi- 
ence, that the average monthly demand for specie from 
the whole number, will not exceed a tenth part of the 
whole sum deposited ; and hence the bank will be safe 
in loaning out the nine thousand of specie, only taking 
care that it be so managed as to keep the remaining 
thousand all the w^hile good. Very much the same 
course is followed, in all issues of paper by specie paying 
banks ; and so long as the reserve of specie is at all 
times abundant to meet the current demand — the issues, 
at the same time, being limited by some safe proportion 
to the specie in hand, so as not to become inflated and 
depreciated — the paper may still truly be said to preserve 
its characteristic of being the representative of coin in 



187 

dleposite, and every holder has his specie whenever he 
pleases to receive it. 

But the case is different when notes are put out to cir- 
culate on the basis of property — on the supposed or as- 
certained ability of the issuers to respond in value mere- 
ly. Such issues have precisely the character of common 
promissory notes, made by responsible individuals. Whe- 
ther payable on demand, or at a day certain, they are 
payable in legal money — in gold and silver if demand- 
ed ; and such promissory notes may pass from hand to 
handj and form a convenient medium of payment be- 
tween persons having confidence in the makers ; but 
they are in no sense the mere representatives of coin, 
and are, therefore, wholly unfit to go into general circu- 
lation, as mone}^, and would be exceedingly dangerous 
if they did. Suppose the case of an individual, and 
such an one might be named, in whose promissory notes 
payable on demand, even to the amount of many mil- 
lions, the whole public would have the most entire con- 
fidence from his known wealth; suppose in the absence 
of any restraining law, he should issue his notes, in the 
form of bank bills, making it known to the public at the 
same time, that while of course he could not escape the 
common legal obligation to pay in coin if demanded, 
yet his purpose was, in the ordinary course of business, 
to redeem only by drafts on specie paying banks, or by 
the bills of such banks, because he would not have the 
trouble and the loss of keeping specie on hand at his 
own office of business ; can there be any doubt that his 
notes would find ready borrowers, that they would cir- 
culate, and, so long as his affairs were known to be pru- 
dently managed, that they would remain in good credit? 



IBS 

And yet would any body, in the least acquainted with 
the subject, pretend that such notes were entitled to be 
deemed convertible paper, and proper to fill the channels 
of currency as the representatives of coin ? And if not, 
why not? Can there be any other reason, than because 
these notes would be strictly bills of credit — having a 
known basis of property and representing property, and 
circulating solely on the confidence of the community 
in the abihty of the maker to answer for his promises in 
vahie, and not at all on the idea that they were eviden- 
ces of title to so much coin on deposits, for the holder, 
with the issuer ? 

And here the question may well be asked — if the dif- 
ference between mere promissory notes or bills of credit, 
and convertible bank paper, be so httle — if, in (he one 
case, the coin itself is at once forthcoming on demand 
from the vaults of the issuer, and, in the other, cash 
property is forthcoming on which the coin, if desired, 
may be readily realized, such as cash drafts, bills of 
specie-paying banks, state stocks in good credit, and the 

like why then may not bills of credit be as well and 

as safely used for money, as any other kind of paper ? 
Why is it, that mere paper money is so much decried 
a«d abused, and why was even the use of it by the 
states expressly prohibited by the Federal Constitution ? 
I suppose the reason to be plain and obvious. The men 
of 1787 understood the reason well enough, for they had 
been taught in a school of experience. In the one case, 
you have, for money, a representative of coin ; in the 
other, you attempt to set up an independent substitute. 
The substitute does very well, as long as confidence 
lasts, and the issues are not in excess. It was not till 



189 

the issues of continental paper exceeded nine millions, 
that the bills began to be depreciated ; by the time they 
had reached three hundred and fifty millions, they were 
worthless. And here is the precise evil of credit paper. 
Being based on property, though payable on demand, 
as was continental paper, the community soon under- 
stand that is to be redeemed with value, but not in coin ; 
it is received, and held, and circulated, with that un- 
derstanding; and, with seeming good faith, therefore, 
and as long as the property of the issuer holds out, the 
amount of issues may be increased. There is nothing 
to be considered in the matter, but the interest of the 
issuer, and the public demand ; and the effort to satisfy 
these leads insensibly, but inevitable, to excess. There 
is nothing to check issues, and there is no possible test 
by which it can be ascertained, that the community has 
as much as it can bear. The first warning is likely to 
be an explosion. But with paper that is strictly con- 
vertible, the case is otherwise. There is a limit to issues 
in the very character of the paper — in the perpetual ob- 
ligation of the issuer to regard himself, as he is regarded 
by others, as the depository of coin for the use of the 
holders of his paper ; an obligation which I think should 
be legally enforced in the case of all banks of issue, by 
requiring them to keep their issues within some fixed 
proportion to the amount of specie on hand. 

And now, Mr. Chairman, let us look once more at 
the banks you will give us under this bill, and see what 
would be the true character of their issues. The bills 
are to bear on their face that they are payable on de- 
mand ; they are to be paid in specie if required ; but 
then there is this unusual provision in regard to all these 



issues, that they are to be accompained with a pledge, 
or mortgage, of cash property to each holder, to the full 
value of the bills in hand. This is the substance and 
effect of the provision. If I give to an individual my 
promissory note, or my bond, payable in cash on de- 
mand, for a sum borrowed, and accompany it with a 
pledge or mortgage of personal or real property, of am- 
ple value, to secure the payment — what is the good 
sense and meaning of the transaction? Is it not simply, 
that if I do not answer his demand whenever he sees 
fit to make it, by paying him cash, or its equivalent, 
that he shall be at liberty to pay himself out of my pro- 
perty? And do I not mean, by the security I offer, 
and the facilities I give him to turn those securities into 
money at will, to purchase his confidence in my ability 
to redeem my obligation in value, and thus to secure 
his forbearance J for as long a period as possible? Would 
my note, or bond, be strictly convertible paper, though 
the cash might be realized, perhaps, at any time, in 
twenty-four hours after demand ? And how would the 
issues of your banks under this bill differ, in this respect, 
from the note or bond, referred to ? Would not the is- 
sues be made with the expectation, and in the confi- 
dence, that, at least after a little time, the community 
would forbear to ask for redemption in specie, and rest 
wholly on the security ? Would not this be the natural 
effect, and soon come to be regarded as the right under- 
standing of the case between the banks and the public? 
And when things had come to this pass, I should be 
glad to know what is to prevent the accumulation of 
this paper to any extent to which the cupidity of the 
issuers, and the greedy and morbid appetite of the pub 



191 

lie might lead. What would be the actual results under 
this bill is not for me to say. That some valuable and 
safe institutions might be established under it, I have 
no doubt ; but it is enough for me to point to the fatal 
mischiefs v^hich might be practised in its name, and 
which would, therefore, receive the sanction of our le- 
gislation. 

My great apprehension is of over issues, and expan- 
sions ; and I see in the provisions of this bill a good 
foundation laid for such a result. It has, to my mind, 
too much the appearance of legalizing mere property 
banks — stock and land banks — which are to issue bills 
as long as they can furnish securities. This was pre- 
cisely John Law's notion of what banks should be, 
when he presented his scheme to the Scottish govern- 
ment. He saw no reason why the paper money in cir- 
culation might not be made to equal the whole value of 
all the real estate in the kingdom. And yet even John 
Law had his notions of convertibility also. The notes 
of the bank of France, got up in his name, and adopted 
by the Regent, were payable in silver coin, at sight, and 
were moreover guarantied to the holders by the pledge 
of the king's name, and, therefore, by a pledge of the 
whole property of the country. The issues became ex- 
cessive, and finally of no value. The assignats of the 
French revolution are not an inapt example of the secu- 
rity and value of issues by property banks. This paper 
was payable at sight, and the whole confiscated property 
of the church was pledged by the government for its re- 
demption. The holders might pay themselves, at any 
moment, in church lands. When forty thousand mil- 
lions of it had been issued, it ceased to be worth any- 



193 

thing, and was never called in, or redeemed in any 
manner. Now I do not say that our stock and land 
banks will ever be allowed to run on to the same wicked 
and ruinous issue ; but I do deem it quite too late a day 
in the history of banking, for any country, having any 
regard to reputation, to attempt to justify itself in a re- 
sort to moneyed institutions having the least semblance 
of property banks. 

The nature of property banks consists perfectly well 
with the common obligation to pay specie when de- 
manded, and with the actual payment when demand- 
ed. The advantage they have is in inspiring a credit 
and confidence in the public mind, which enables them 
to escape all demands on their vaults till a fatal mischief 
is done. The issues swell, and still the flood rises, and 
though there is depreciation, nobody believes it so long 
as a paper dollar exchanges for a silver one ; and this 
it will continue to do, the currency all the while puffing 
up, and commodities rising as if leavened with it, till, 
suddenly, a demand for specie comes from abroad, and 
a panic ensues, and the first act closes with a general 
suspension of payments. 

Gentlemen have more than once let fall, since this 
scheme has been in agitation, that in their judgment the 
issues of these banks should be deemed convertible, he- 
cause the property pledged, especially the stocks, may 
always be converted. This shows plainly enough what 
convertibility means, according to their conception of it. 
And on their principle, any property which may be con- 
verted into cash with facility, is just as good a basis for 
issues as specie. Indeed one gentleman, an inhabitant 
of the west, and a strong and impatient advocate of this 



193 

bill, has declared on this floor that wheat was a better 
basis for bank issues, in his part of the slate, than specie 
could be. Who can say he is wrong, if the principle of 
this bill is right ? 

But the glory of this project, in the estimation of gen- 
tlemen, is the security which it offers to the bill-holder : 
and as long as this point is gained, they can see no pos- 
sible danger in any quarter. And in regard to my pro- 
position, that the banks shall be required to keep a cer- 
tain ratio of specie on hand, though told, over and over 
again, that this is designed chiefly as a means of limiting 
the volume of issues, they still insist upon it that it is all 
idle and useless — nay quite ridiculous — because the bill- 
holder is already made abundantly secure ! They do 
not see, or they will not see, how deep a stake the com- 
munity has in the question, whether Ave are to have a 
regulated and uniform currency, at all times convertible, 
and limited in volume to the true wants of business, or 
an unsteady and fluctuating currency, tending to ruin- 
ous expansions, and unsettling everything that is stable 
and valuable in society, habits as well as property, mo- 
rals as well as business. They see one only possible 
evil growing out of bank issues — the losses of bill-holders 
by occasional bank failures — and they do not or will 
not remember that these losses, though sometimes se- 
vere and distressing, (and they ought therefore to be 
strictly guarded against,) are not to be compared with 
those w4iich connnunities suffer from depreciated paper, 
consequent on expansions, from varying the terms of con- 
tracts, causing prices to fluctuate, and giving to all pro- 
perty as fickle and changeable a character as if it rested 
on no solid foundation whatever, but was the mere sport 

17 



194 

of the wind or the tide. They seem to me to be smit 
with the love of property banks, and they can therefore 
see nothing- excellent or desirable, in a system of bank- 
ing, except security to the bill-holder. Security to the 
bill-holder — there is surely something, I know not what, 
about this security to the bill-holder, which has dazzled 
the vision of gentlemen, and left them less of the power 
of discrimination than they are used to exercise. Safety 
to the bill-holder, exclaimed an honorable and learned 
friend of mine the other day. has been the object of all 
the various guards heretofore thrown around the busi- 
ness of banking : and now" that we have gained that 
point, now that the bill-holder is safe, let us do nothing 
which wall go to regulate or control the discretion of the 
banker in any other particular ! We shall have the best 
paper currenc}^ in the world, because it will rest on the 
basis of cash property, pledged for its redemption — a 
basis for issues better than specie can be, because, while 
the basis is specie, whenever the balance of trade is 
against us, the precious metals will flow out of the coun- 
try, and leave our paper with nothing to stand upon ! 

Now I tell my honorable friend, and I tell all my 
friends on this floor, that, in my poor judgment, security 
to the bill-holder is a very good thing, but it is not every 
thing in a system of banking ; and if this point only 
be cared for, while we neglect to make the community 
secure against the revulsions and losses consequent on a 
bloated condition of the currency, nay, while we our- 
selves are engaged in stimulating the creation of un- 
limited paper issues, I think we shall perform but a part, 
and a very small part too, of our duty to the people, and 
* even that what we do, would be much better left undone. 



195 

Let gentlemen take the tiouble to reflect a little on 
what 'will really be gained by their proposed security to 
the bill-holder. In the first place, the property pledge 
can have no tendency whatever to prevent an inflation 
of the currency, which is always a point of danger ; on 
the contrary, in the absence of the specie check on 
issues, the tendency will be directly, as I think I have 
shewn, to produce such-a result. Now, in this state of 
things, it would be some consolation to know, that this 
contrivance was hkely at least to effect the particular 
object in view — namely, the security of the bill-holder. 
Will it do so? As much, certainly, as any such con- 
trivance can — but can the actual bill-holder be made 
wholly secure by any invention of the sort? Let us 
look at this. 

The property placed in pledge is to be the ultimate 
resort for the redemption of the bills. A single bank, for 
example, falls into difficult}^ and com.es to a sudden 
stand, with a million in circulation, scattered in every 
part of the state. Immediately the comptroller takes 
order for the disposition of the property in pledge, and 
the payment of the notes standing out ; and who mainly 
will reap the benefit? Wh}^, clearly, according to all 
experience, and from the necessity of the case, not t,he 
original holders of the paper at the failure, but those who 
have purchased it at a discount— not those who hold it 
as money, but those who hold it as merchandize — 
namely, the brokers. In case of a general suspension, 
or a general crash among the banks, following an in- 
flation of the paper system, the same thing must hap- 
pen. That very class of persons particularly, the in- 
digent, whom you are most anxious to protect, would 



196 

be found to be just the least protected of all. They 
have this paper in possession, as money, and for imme- 
diate and necessary use. They are obliged to part with 
it, because their daily subsistence depends upon it, and 
they must let it go for what it is worth. And whatever 
gentlemen may think, the paper would be immediately 
and seriously depreciated, in any such event. The 
banks having failed, no amount of securities, though 
Ossa be piled on Pelion, would keep the bills at par, at 
least at first, and for sometime after the explosion. In 
remote parts of the state particularly, they would drop 
down to prices far below their nominal value, and be 
picked up by those who always have the means of 
speculating out of the necessilies and misfortunes of the 
poor. And on the whole, I have no doubt that in every 
case of the redemption of these issues at the hand of the 
comptroller, much the larger part of them would be re- 
deemed for the benefit of brokers. Is it worth while, I ask 
gentlemen, to pm-sue this object so strenuously, for the 
sake of such a result, and to pursue it, too, as is it seems 
to me to be pursued, regardless of evils of probable, if 
not ifievitable consequence, and at any rate to the ex- 
clusion of considerations, connected with the subject, of 
vastly more moment. Is it worth while, I ask, to fol- 
low up this system of legislative quackery, for I cannot 
call it by a better name, and be forever prescribing for 
symptoms, when we might come at once to (he disease ? 
The best securit)^, in my judgment, which bill-holders 
can possibly have, is in a system of banking, conducted, 
under legal regulations, on sound, well-known and in- 
disputable principles. Compel the observance of these 
principles, wdiich are few and easily understood, and 



197 

nothing will be left to complain of on the part of the bill- 
holder. He is safe, in the general safety of the system. 
My plan for a general banking law would be exceed- 
ingly simple, and I believe entirely safe. In the first 
place, I would prefer to give proper corporate powers to 
associations for banking, instead of the somewhat awk- 
ward facilities afforded by this act ; and I see no consti- 
tutional impediment in the way of conferring such cor- 
porate powers by a general law. But if others do, so 
that such a law could not be passed, then I would con- 
sent to the formation of these joint-stock companies. 
Provision being made for the voluntary formation of 
Banking Associations, I w^ould prescribe the terms on 
which they might establish banks of issue. The prin- 
cipal points of regulation would be, that there should be 
a loanable capital actually paid in ; that the issues should 
never exceed the amount of the capital - that the month- 
ly average of specie in vault should bear some fixed 
proportion to the circulation — perhaps twenty per cent : 
and that ample returns should be made, with sufficient 
particularity, under oath, at short intervals, with provi- 
sion for thorough inspection in case the least doubt or 
suspicion existed. I should depend on the specie basis 
to prevent over issues, believing that nothing else can 
check them effectually, and that this would do so, while 
at the same time room enough would be afforded for 
flexibility. In the very steadiness of the system which 
would thus be induced, I should find a valuable safe- 
guard for the bill-holder. His direct safety would be 
found in the money securities of which the bank must 
be in possession, of double the value of all the bills in 
circulation, and in regard to which the holders of bills 
17* 



198 

would stand as preferred creditors. The securities ta- 
ken for the capital loaned, and the securities taken for 
circulation, must both of course be applied to the redemp- 
tion of bills, before any thing could be divided among 
the stockholders. The chances of loss to the holders of 
Bank of England notes, if they depended wholly on the 
securities taken for issues, have been calculated to be as 
one to three hundred thousand ! 

But, Mr. Chairman, in the present condition of things, 
and especially considering the present temper and con- 
stitution of the houj^e, I shall propose no other radical 
change in the General Banking Law now before us, 
than such as is suggested in my printed amendments, 
I shall take it for granted that the main feature of this 
bill is to be preserved ; the pledge of property for issues ; 
and I shall rest all my hopes of safety to the community 
on the salutary check which the legal requisition of a 
specie basis will impose on the banks. Here I take my 
stand. The adoption of the proposition which I make 
to this effect, changes in my view, the whole character 
of the bill. It will place issues distinctly on another 
basis than that proposed in the bill, and on the right ba- 
sis. With this basis assumed, we are no longer engaged 
in setting up property banks of issue, and providing 
for a supply of bills of credit. We shall have free bank- 
ing, with the first and main principle of sound banking 
carefully preserved. On this principle I plant myself, 
and I shall cheerfully abide the issue both here and else- 
where, for the present time and for the future. With it, 
I am for the bill ; without it, I shall record my vote 
against it. I yet trust, somewhat confidently, that it 
will be adopted ; and though the prospect has heretofore 



199 

been dark and unpromising, yet I do not think that I 
deceive myself in taking courage from the gratifying 
attention and favor with which my remarks, extended 
to so unusual a length, have been received. I have 
strong hope, and strong ground of hope, that my amend- 
ment will prevail. 

Some indication of the importance of my amendment 
in my own estimation, may be found in the labor which 
I have bestowed in endeavoring to satisfy this house of 
the dangerous character of the bill without it. In no 
degree can this bill receive a favorable consideration at 
my hands in its original shape. I am quite serious and 
sincere when I say that 1 regard it as an experiment on 
the currency, which would be hkely to end in greater 
disaster to the good people of this state than any or all 
the government experiments of the last eight years. If 
it is to be tried as proposed, w^hy be it so — personally I 
desire no part of the credit belonging to the measure ; 
and I desire no friend or friends of mine, personal or po- 
litical, to have any part of the credit. My solemn con- 
viction is, that no political man, and no political party, 
could ever bear up under the burthen of such a measure. 
It cannot stand the test of examination, the test of prin- 
ciple, the test of time. It will fail, if attempted, as all 
plausible but unsubstantial theories and experiments do; 
it will fail, and the very success which it may have for 
a brief season, will only mark its downfall with the more 
notoriety, and the greater shame. 

Let gentlemen remember, that it is one thing to be 
ingenious and inventive, and another to be wise. Let 
them remember the famihar story of Daedalus, an ar- 
tist of surpassing skill and invention, and the most 



200 

useful man of his period, while he contented himself 
with employing his powers in the construction of the 
wedge, the axe, the wimble, and the sails of ships. 
He was at least innocent too, when he amused his coun- 
trymen with his moving statues, which seemed instinct 
with life. But when he attempted to set the laws of 
Nature at defiance ; w^ien he set himself at work to con- 
trive his wings of feathers and wax, for himself and for 
Icarus, his son, he committed a gross and fatal error. 
The confiding and adventurous boy rose, as he should 
have known he would do, too high — too near the sun 
— and fell, never to rise again. Let gentlemen beware 
how they attempt to imitate this bad example, by sup- 
plying this young and adventurous people W'ith their 
wings of feathers and wax. Be sure, we shall put them 
on if you furnish them to us, and w^e shall rise upon 
them, no doubt, to a high flight; and then the first 
fervid kiss of the risen sun, long before he shall have 
reached his meridian, will melt away the support on 
which we rest, and leave us to a precipitous fall, and a 
melancholy and cruel fate. 

[The General Banking Law, with Mr. Barnard's 
amendments, being still under consideration in commit- 
tee of the whole, and several gentlemen having spoken 

some in answer to Mr. Barnard — he (Mr. B.) spoke 

in reply to the following effect :] 

Mr. Chairman : I shall not detain the committee with 
any further extended discussion of the points at issue, 
between myself and gentlemen who have been pleased 
to notice, and to favor me with an attempt to answer, 
my position and my former remarks. The positions ta- 



201 

ken b}^ me were too plain to be misunderstood, or mys- 
tified. In general terms, they were these : 

That what we want in this country is capital, and 
an extension of the credit system; but that this bill 
seems to contemplate only an extension of currency, 
and that at the expense of capital and the credit system. 

That we already have a banking system in this state 
authorized to supply us with about thirty millions of pa- 
per, and if we want more currency than this, we may 
have it, by passing a general banking law^ on a sys- 
tem analagous and auxiliary to the present. 

That the eiTect, if not the object of this bill, if it shall 
pass without amendment, will be the establishment of 
banks to issue paper for circulation, resting on property 
as a basis, and not paper based on, or representing, coin. 

That the only way in which you can have a safe and 
sound paper currency, is to secure that currency on a 
specie basis, and let it rest on convertibility, and not 
merely on property or credit. 

That it is the duty of the state to provide for the peo- 
ple a local currency of uniform value. 

Now I might appeal, I think, with safety, to any im- 
partial auditor to sa}?', whether I have been fairly met in 
this argument, and fairly answered, I might ask, which 
of my positions has been overturned, which of them wea- 
kened ? There has been plenty of denunciation, some 
loud and vehement, if not angry, declamation, and 
other exhibitions, indicating real alarm for a favorite 
measure, and yet shewing a determination to carry a 
point by a display of boisterous courage, rather than of 
manly strength. Gentlemen have talked, a little grandi- 
loquently, of the principles of free trade, of the w^onder- 



202 

working power of credit, and of the absurdity of all 
hard money schemes ; and we have had opened to us 
some ravishing views of the golden glories to be reaUzed 
and enjoyed under this bill. But where have we been 
favored with argument, with critical examination and 
analysis, with sober views, with rational conclusions? 

The house has been gravely told, amongst other 
things, that I have been entertaining it with the theories, 
the ever-varying theories, of political economy ; that I 
have resorted to ancient and exploded systems, occa- 
sionally recognized perhaps in other countries and other 
times, but in no degree applicable to the altered state of 
things, at this day, and in this country. Indeed ! And 
if I had had occasion to speak of the Corpernican sys- 
tem, or the law of gravitation, I should have been told, 
I suppose, that these were very good theories in the days 
of Galileo and Newton, and well enough even now pos- 
sibly for Italy and England, but I must not attempt to 
impose such absurdities on the American people, as hav- 
ing any applicability to this climate and latitude, and 
especially at so late a period as this year of our Lord, one 
thousand eight hundred and thirty-eight ! Let gentle- 
men name to me one doctrine or principle, one only, 
maintained by me, as belonging to the subject in hand, 
about which there have ever been two opinions, from re- 
putable sources, on either side of the water — let them 
specif}?- — put a finger on one — I ask for one only — and 
then they may talk of ever-varying theories, and ex- 
ploded systems, with some shew of reason, and to some 
good purpose perhaps — but not till then. 

Gentlemen will not listen to any proposition in regard 
to uniformity of value in the currency of the state, be- 



203 

cause that would be interfering with the freedom of 
trade. If the bills of country banks stand at a discount 
in the city, what then, says the chairman of the bank 
committee — are they not depreciated by a law of trade, 
and shall we attempt to legislate them up to par? So, 
then, currency is to be regulated solely by the laws of 
trade, is it? Government is no longer to have any con- 
trol over it. Money is no longer to be money, but mer- 
chandize : and we, the legislature, are to authorize the 
creation of unlimited quantities of paper, which it is ad- 
mitted will be depreciated at certain points, the moment 
it appears there, and give it up to the laws of free trade. 
Well, the country is, at this moment, enjoying the blessed 
benefits of this very freedom of trade in bank money. 
The notes of Philadelphia banks are worth three per 
cent less than the notes of New- York banks, and those 
of Mississippi, some of them, twenty-five per cent less. 
And this is free trade in banking and money ! Sir, I 
had thought that the doctrine of the whigs was quite 
different fiom this. I had thought it was rather a dis- 
tinguishing doctrine of theirs, just now, that it was the 
duty of the general government to provide for the people 
a medium, or money, of uniform value, for the conve- 
nience of payments in the discharge of contracts, and for 
equalizing exchanges, and not leave this important mat- 
ter, as it is now, to the laws of free trade. Such, at 
least, is my doctrine ; and I believe it to be the doctrine 
of the party of which I am a humble member. And 
since the care of the currency has been abandoned by 
the general government — abandoned to free trade — I 
think it imperiously the duty of the local governments 



204 

to legislate for uniformity in their local currencies — the 
laws of free trade to the contrary notwithstanding. 

Mr. Chairman, this doctrine of free trade has been 
interposed as a sort of estoppel to all legislation, the object 
of which shall be to secure a specie basis for issues, and 
to limit and control their volume. From all sides we 
hear it repeated, that security to the bill-holder for 
eventual redemption, is the one thing, and the only 
thing needful. With most of those who hold this opi- 
nion, it rests simply on the false assumption, that society 
has no other interest than this to protect, in the case of 
a general license to issue currency — no other peril to en- 
counter—no other possible danger to apprehehend ; as if 
such a thing as expansion, and the existence of bank 
paper practically inconvertible, and ruinously inflated, 
was never heard of, or as if the losses and general wreck 
which comes with such a condition of things, could be 
prevented or cured by this single provision of security to 
the bill-holder ; as if the eventual redemption, in value, 
of a few millions in bills put forth as money, would 
make good all the losses, arising from fluctuations in 
prices, which would accrue on contracts, enterprises and 
speculations, to ten, twenty or fifty times that amount, 
and to which those very issues had stimulated ; or as if 
such final payment of bill-holders, would repair the dis- 
astrous breach which would be made in public morals 
and public faith, in the universal sense of right and wrong, 
in that delicate perception of the nature and beauty of 
common honesty, and in that popular virtue, which no 
republican country can lose, and be safe ! With most of 
those, I say, who have delivered their sentiments on this 
point, security to the bill-holder is the end of all things — 



205 

it makes every thing safe. But with a few, and with 
one honorable member in particular, whose position in 
this house makes his opinions of consequence, the doc- 
trine maintained is not quite so blind, nor quite so tame. 
With them every thing is resolved into a question of free 
trade. To compel bankers to secure the holders of their 
paper is well enough. This violates no freedom of trade 
because there is no freedom or equality between the con- 
tracting parties. Men are obliged to take bank paper ! 
But to allow bankers to issue paper, truly the represen- 
tative of coin and truly convertible, and to restrain them 
from puling out any other kind of paper to circulate as 
money — this is a gross violation of the laws of free 
trade ! 

Well, I would respectfully ask gentlemen, in the first 
place, why do you insert or tolerate the insertion, in this 
bill, of a section requiring all bankers to pay their notes 
on demand in gold and silver? Is it not enough if they 
pay in value? May you not safely leave the commu- 
nity to take their paper, or not, on those terms ? Why do 
you thus violate the laws of free trade? And besides, 
consider how useless it is. Do not the constitution and 
laws already require the discharge of all such contracts, if 
demanded, in gold and silver? And do you gairi any 
thing by re-enacting provisions which already exist in 
the face of the laws of free trade? I aver, fearless of 
contradiction, that for all that is done in this bill at pre- 
sent towards securing convertibility, and a specie basis 
for issues, you would be quite as wise, and pursue your 
object much more directly, if you should strike out what- 
ever there is in it relating in any way to gold and sil- 
ver. It is only there t3 blind and mislead the public. 
18 



206 

You do not add, in the least, by any thing inserted here, 
to the obligation, or the duty, of the banks to redeem their 
dues in specie when it is required ; while you do lend 
your sanction to a violation of those laws of free trade 
which you seem to have taken under your special pro- 
tection. 

But, sir, it is as I have all along feared. There are 
gentlemen here, in this house, here to legislate for a 
great people, on this great interest — not many I hope — 
who go for free trade — free, unlimited, and unrestricted 
trade, in the matter of bank issues — on the single con- 
dition of making the bill-holder secure against eventual 
loss. This position has been distinctly avowed, and 
boldly maintained. This doctrine abandons, at once, 
all duty of government towards the currency, except as 
to the single point indicated ; it does more, it denies that 
government has any right to interfere. It declares dis- 
tinctly that all such matters as these ; whether issues 
shall have the character of convertible paper, represent- 
ing coin, or of commercial paper based on property, 
value, or general responsibility ; whether they shall be 
limited or unlimited, with or without check ; whether 
they shall be money or merchandize, at par value or 
depreciated, uniform or otherwise — these are all mat- 
ters quite out of the cognizance of government, and be- 
longing exclusively to the province and jurisdiction of 
the laws of trade. The doctrine not only leaves gold 
and silver to be dealt with as commodities, but it leaves 
bank paper currency, to be dealt with as a commodity. 
Paper is hereafter to bear value according to supply, just 
as any article of merchandize. It is to bear one price 
at one point in the state, and a different price at another 



207 

point; one price to-day, and another price to-morrow. 
It is to go into the market on a footing witli cotton and 
corn, and be just as good a standard of vahie, and just 
such a common medium of payment and exchange as 
they — and no better. When the season is propitious 
and the crop abundant, prices will be knocked down; 
that is, in second hands, for in original hands, with the 
issuers, the price, namely the interest, will be the same; 
and when, from any cause, there is a short crop, prices 
will advance. And this is money on the free trade 
plan ; and this is to be our money ! 

And, moreover, Mr. Chairman, this free trade in pa- 
per money, is the credit system, as gentlemen under- 
stand if, and the perfection of the credit system. The 
grand point they aim at, is to facilitate an exchange of 
credits, tlie credit of individuals for the credit of the banks 
in the shape of bank money ; and it is this operation of 
exchanging credits, without stint or limit, that is to en- 
rich all parties, revive and support business generally, 
and create a living soul of prosperity under the ribs of 
dead commerce. They care not what capital is, or how 
ii may be defined — not they. Credit is capital enough 
for them, and paper issues are credit, and therefore capi- 
tal. They do not want to borrow capital on the strength 
of credit ; that would l)e a tame business ; but they 
want to borrow credit — or rather they would make a 
fair and independent transaction of it, and pay up as 
they go along, by giving credit for credit, and adjusting 
the difference of value, if there be any, on the spot 
Credit is especially the poor man's capital, they ex- 
claim ; not [lis own credit, but that which he borrows in 
ilhe form of bank issues. Give us a supply of these, 



208 

and nobody can complain of the want of capital, nobody 
can be poor. Pour out bank issues till the lap of earth 
is full, and the land will overflow with riches. An ar- 
ticle in itself utterly without value, contrived as an in- 
strument to facilitate exchange of values, "which is use- 
less for any other earthly purpose, and wholly unpro- 
ductive when thus employed — that article, increased 
and multiplied indefinitely beyond any possible use for 
it in its proper sphere, as a medium of exchange, fit for 
no other use, and put to no other use — that article, thus 
in excess, becomes capital, and profits, and wealth, ma- 
king barrenness itself fruitful, and sterility rich, wherev- 
er it flows, and in exact proportion to the copiousness 
with which it is showered on the community. And this 
is the credit system, according to the notions of gentle- 
men, and the glorious effects of free trade in credit and 
paper money ! 

Sir, every thing which has fallen from gentlemen in- 
dicates clearly to my mind, that they are indulging the 
dangerous notion that paper can well enough take the 
place of specie as an independent substitute for money. 
They will do nothing towards securing a specie basis 
for circulation by law, because gold and silver are com- 
modities, and nothing but commodities, and must be 
left free to go wherever there is a demand for them ; and 
they will not have a paper circulation that is to expand 
and contract as specie flows in or flows out. They 
must have it based on property put in pledge, which 
cannot flow out after it has once come in, and then the 
currency will stand firm and full, no matter what be- 
comes of the specie ! And then to reconcile us to the 
adoption of this paper money system, we are informed 



209 

that all our alarms about expansions and contractions arc 
quite useless, because the precious metals have been found 
to be more fluctuating than any thing else ever used as 
money. A remarkable fact certainly, and proved in a 
most remarkable way— proved by the wonderful disco- 
very of an extraordinary variation in the price of wheat 
in a single year in England — probably in the time of 
the Crusades. And besides, say they, we wani expan- 
sions of paper. Gentlemen tell us that we have never 
had enough of it, and they seem to think we never can 
have, till we shall sever all connexion and dependence 
betw^een specie and paper. And finally we are told 
again, that the expansion of paper, is onl}^ the expan- 
sion of the credit system, and, of course, so far from be- 
ing dreaded and deprecated, should be greatly desired, 
Mr. Chairman, who can lienr such sentiments coming 
from respectable sources, v/ho can contemplate the issue 
of such doctrines if once they take root and prevail, 
without amazement, without grief, without deep concern 
and alarm? 

A single point presented by the honorable chairman 
of the bank committee, in regard to the character of the 
proposed banks, under this bill, deserves attention. He 
finds a parallel in the bank England, and so do I. It 
is true, the whole capital of that bank is perpetually on 
loan to the government, which, therefore, is the debtor 
of the bank to that amount, and becomes in effect the 
guarantor of the bills in circulation : just as in our stock 
banks, the holders of bills would have the pledge of go- 
vernment securities. But I ask my friend if the capital 
of the bank of England, thus loaned, or the securities 
taken for it, are in any manner the basis of its issues? 
18* 



210 

Once it might have been so : but a suspension of specie 
payments for near a quarter of a century, by that bank, 
was experience and lesson enough for her, and for the 
people of England. Since the time of that suspension, 
the government of that institution has given to it a law, 
which is observed with great strictness, requiring that 
the proportion of bullion in bank to its cash liabilities, 
including deposites, shall not be less than one for three. 
All that I ask is, that the principle of that rule shall be 
adopted and enforced here ; and the utmost extent to 
which I have proposed to go, has been to fix the propor- 
tion of speci? to circulation, not including otber liabili- 
ties, at one for five. But this, it seems, is wholly inad- 
missible, as it would seriously interfere with free trade 
in banking, and in the expansion and use of paper 
issues, which gentlemen are pleased to denominate cre- 
dit and the credit system ! 

But, Mr. Chairman, I shall not pursue the discussion. 
Let us come to the vote. My own opinions are before 
the house and will be before the country. So are, and 
will be, the opinions of gentlemen who insist upon the 
bill, and nothing but the bill. Let us have the vote ; 
and whatever may be the issue here, or the more au- 
thoritative verdict elsewhere, lam ready for it, and shall 
cheerfully abide by it. 

Before I sit down, however, I have a word to say, in 
all candor, to my friend from New-York, the honorable 
chairman just referred to, for whom I entertain, and am 
sure I always shall entertain a very high respect, and 
none other than the kindest feelings. My worthy friend 
commenced his brilliant speech in reply to me, in a strain 
somewhat unusual, if not discourteous; not certainly 



211 

either in as good taste, or in as good temper as we are ac- 
customed to expect, and have a right always to expect 
from him. But first let me make a confession of sins on 
my part. Some few days ago, on the same suhject, 1 treat- 
ed the gentleman harshly. 1 was sorry for it, and I told 
him so, as soon as it was over. I liad felt deeply, and 
I expressed myself strongly — too strongly perhaps. I 
had listened to sentiments, which, coming as they did 
from him, occupying a position at the head of the com- 
mittee on banks, I thought were too likely to be mista- 
ken for the sentiments of this house, if they should go 
forth without remark. I thought them not only mista- 
ken, but very mischievous, and I meant, for myself, to 
disclaim them in very decided terms. In doing this, I 
was wrong, if I allowed myself to be betrayed into using 
the language of rebuke or reproach. I had no right to 
do so. 

Now, I could wish that this passage had been entirely 
forgotten, and that my friend had approached his reply 
to my speech with different feelings from those which 
seemed to possess him at the moment. I could wish 
he had thought he could afford to let me enjoy the inno- 
cent vanity of believing that 1 had not made an utter 
failure in my attempt : that I had not been wholly un» 
successful ; and, if he could have gone a little out of his 
way, and bestow^ed a word of commendation on my 
effort, in a very cautious manner, it would have been 
gratefully received. But I was not so fortunate. On 
the contrary, I was told of several things very disa- 
greeable for a gentleman to hear of himself; as that I 
had wasted the time of the house for two or three days, 
without once having touched the merits of the subject 



212 

in hand ; that I bad stood np before the house to claim 
the merit of superior wisdom — and the bke. Now, sup- 
posing all this to be true, it was very hard to be obliged 
to sit here, in such a presence, and be told of it. And 
then to be compared to the mad astronomer in Rasselas, 
who fancied that he bad the responsible charge of the 
weather on his hands — that was the unkindest cut! 
And the worst of it is, I am afraid there is some parallel 
between my case and that of the philosopher. He, I 
think, had succeeded, as he supposed, in acquiring much 
power over the w^eather and the seasons. The sun lis- 
tened to him, and passed from tropic to tropic by his di- 
rection ; the clouds poured their waters, and the Nile 
overflowed, at his command ; he could restrain the rage 
of the dog-star, and mitigate the fervors of the crab ; but, 
unhappil}^, he could not control the winds — the winds 
would not obey him. Well, sir, am I not much in the 
same predicament? I think I could have stood up 
against what there w^as of reason or argument in my 
friend's speech ; if there had been nothing else in it, I 
should even have hoped to save my poor amendment. 
But who or what could stand the wind, the storm, the 
tempest of passion and declamation, with which I was 
assailed? Yes, sir, if I could have controlled and re- 
strained the wind, I should deem myself safer and more 
fortunate than I now do. 

But let that pass. My honorable and talented friend 
favored us, in the course of his speech, with a burst of 
passionate and splendid eloquence, on the wonder-work- 
ing poAver of credit, and the credit system. It was a 
theme worthy of him, and he did himself excellent jus- 
tice in the management of it. Only it is a pity he 



213 

should so utterly mistake what credit is. On such a 
theme, and inspired by his example, I could almost hope 
to be eloquent myself. Contemplating the certain glo- 
ries of our beloved state and country, under a proper use 
of loanable capital, and an extension of the true credit 
system ; the elements of prosperity all set in motion ; 
human hands and human heads all busy ; the winds 
laboring for us ; water laboring for us ; machinery at 
work; and steam at w^ork, on the earth, and in the 
earth, and on the waters — with these things in contem- 
plation I might almost venture myself to attempt to rise 
to a lofty and fervid strain of observation and remark. 
But, sir, I shall make no such attempt. It is not ray 
vocation, and I yield the palm herein, to my friend from 
New- York. I trust it is not necessary for either of us 
to make any such display, for the sake of proving how 
ardently we love our country. Yet are such things 
sometimes done; and when one person attempts it, 
others are apt to attempt it also. Does my friend re- 
member the manner in which Hamlet accosted Laertes, 
when he found him making a somewhat extravagant 
exhibition of his love for the poor Ophelia, leaping in 
her grave, and calling on the standers-by to 

"pile their dust upon the quick and dead, 

" 'Till of that flat a mountain they had made, 
'' To o'ertop old Pelion?" 

Said Hamlet: 

"/iov'd Ophelia; forty thousand brothers 
" Could not, with all their quantity of love, 

" Make up my sum" 

" Dost thou come here to whine? 

'*To outface me with leaping in her grave? 

" Be buried quick with her. and so will I ; 



214 

" And, if thou prate of mountains, let them throw 
"Millions of acres on us, 'till our ground, 
"Singeing his pate against the burning zone, 
"Make Ossa like a wart! Nay, and thou'lt mouth, 
" I'll rani as well as thou." 

Now, I shall not say, that my worth)'^ friend, in the 
passionate and eloquent display made by him of his 
zeal for the prosperity of the state, attempted to play 
Laertes in his speech ; but I will say, if he had done so, I 
should not follow him by enacting Hamlet. I could have 
no controversy of that sort with him — no, nor of any 
sort, except it be in a generous contest which shall 
serve the great interests of the people most faithfully, 
wisely, and successfully, in our humble place here — 
which shall most elTectually contribute, by his labois 
and his counsel, to advance their true and lasting hap- 
piness, prosperity and glory. 



APPENDIX. 



[The following is the General Banking Law, as it finally passed 
both Houses of the Legislature.] 



AN ACT 

TO AUTHORIZE THE BUSINESS OF BANKING. 

Passed April 18, 1838. 

The People of the State of New- York, represented 
in Senate and Assembly^ do enact as follows : 

g 1. The comptroller is hereby authorized and re- 
quired to cause to be engraved and printed in the best 
manner to guard against counterfeiting, such quantity 
of circulating notes, in the similitude of bank notes in 
blank, of the different denominations authorized to be 
issued by the incorporated banks of this state, as he may 
from time to time deem necessary to carry into effect 
the provisions of this act, and of such form as he may 
prescribe. Such blank circulating notes shall be coun- 
tersigned, numbered and registered in proper books to 
be provided and kept for that purpose in the office of 
said comptroller, under his direction, by such person or 
persons as the said comptroller shall appoint for that 



216 APPENDIX. 

purpose, so that each denomination of such circulating 
notes shall all be of the same similitude and bear the 
uniform signature of such register, or one of such regis- 
ters. 

§ 2. Whenever any person, or association of persons 
formed for the purpose of banking, under the provisions 
of this act, shall legally transfer to the comptroller any 
portion of the public debt now created or hereafter to 
be created by the United States or by this state, or such 
other states of the United States as shall be approved 
by the comptroller, such person or association of per- 
sons shall be entitled to receive from the comptroller 
an equal amount of such circulating notes, of different 
denominations, registered and countersigned as afore> 
said ; but such public debt shall in all cases be, or be 
made to be, equal to a stock of the state producing five 
per cent per annum ; and it shall not be lawful for the 
comptroller to take any stock at a rate above its par 
value. 

g 3. Such person or association of persons are hereby 
authorized, after having executed and signed such cir- 
culating notes in the manner required by law to make 
them obligatory and promissory notes payable on demand, 
at the place of business within this state, of such person 
or association, to loan and circulate the same as money, 
according to the ordinary course of banking business as 
regulated by the laws and usages of this state. 

g 4. In case the maker or makers of any such circu- 
lating note, countersigned and registered as aforesaid, 
shall at any time hereafter on lawful demand during 
the usual hours of business, between the hours of ten 
and three o'clock, at the place where such note is paya- 



APPENDIX. 217 

ble, fail or refuse to redeem such note in the lawful mo- 
ney of the United States, the holder of such note making 
such demand may cause the same to be protested for non- 
payment by a notary public, under his seal of office in 
the usual manner ; and the comptroller, on receiving 
and filing in his office such protest, shall forthwith give 
notice in writing to the maker or makers of such note 
to pay the same ; and if he or they shall omit to do so 
for ten days after such notice, the comptroller shall im- 
mediately thereupon, (unless he shall be satisfied that 
there is a good and legal defence against the payment 
of such note or notes,) give notice in the state paper that 
all the circulating notes issued by such person or asso- 
ciation will be redeemed out of the trust .funds in his 
hands for that purpose ; and it shall be lawful for the 
comptroller to apply the said trust funds belonging to 
the maker or makers of such protested notes, to the pay- 
ment and redemption of such notes, with costs of protest, 
and to adopt such measures for the payment of all such 
circulating notes put in circulation by the maker or ma- 
kers of such protested notes, pursuant to the provisions 
of this act, as will, in his opinion, most effectually pre- 
vent loss to the holders thereof 

g 5. The comptroller may give to any person, or as- 
sociation of persons, so transferring stock in pursuance 
of the provisions of this act, powers of attorney to receive 
interest or dividends thereon, which such person or asso- 
ciation may receive and apply to their own use ; but 
such powers may be revoked upon such person or asso- 
ciation failing to redeem the circulating notes so issued, 
or whenever, in the opinion of the comptroller, the prin- 
cipal of such stock shall become an insufficient security ; 

19 



218 APPENDIX. 

and the said comptroller, upon the application of the 
owner or owners of such transferred stock in trust, maj; 
in his discretion, change or transfer the same for other 
stocks of the kinds before specified in tlijs act, or may 
re-transfer the said stocks, or any part thereof, or the 
the mortgages, or any of them, hereinafter mentioned 
and provided for, upon receiving and canceUing an 
equal amount of such circulating notes delivered by him 
to such person or association, in such manner that the 
circulating notes shall always be secured in full, either 
by stocks, or by stocks and mortgages, as in this act pro- 
vided. 

g 6. The bills or notes so to be countersigned, and 
the payment of which shall be so secured by the trans- 
fer of public stocks, shall be stamped on their face, " Se- 
cured by the pledge of public stocks." 

g 7. Instead of transferring public stocks as aforesaid 
to secure the whole amount of such bills or notes, it 
shall be la\vful for such person or association of persons, 
in case they shall so elect before receiving any of the 
said bills or notes, to secure the payment of one half of 
the Avhole amount so to be issued, by transferring to the 
comptroller bonds and mortgages upon real estate, bear- 
ing at least six per cent interest of this state, payable 
annually or semi-annually ; in which case all such bills 
or notes issued by the said person or association of per- 
sons, shall be stamped on their face, " Secured by pledge 
of public stocks and real estate." 

g 8. Such mortgages shall be only upon improved, 
productive, unincumbered lands within this state, worth 
independently of any buildings thereon, at least double 
the amount for which they shall be so mortgaged : and 



APPENDIX. 219 

the comptroller shall prescribe such regulations for as- 
certaining- the title and the value of such lands as he 
may deem necessary ; and such mortgages shall be pay- 
able within such time as the comptroller may direct. 

^ 9. The comptroller may, in his discretion, reassign 
the said bonds and mortgages, or any of them, to the 
person or association who transferred the same, on re- 
ceiving other approved bonds and mortgages of equal 
amount; and when any sum of the principal of the 
bonds and mortgages transferred to the comptroller shall 
be paid to him, he shall notify the person or association 
that transferred the bonds and mortgages of such pay- 
ment, and may pay the same to such person or associa- 
tion on receiving other approved bonds and mortgages 
of equal amount. 

§ 10. The person or association of persons assigning 
such bonds and mortgages to the comptroller, may re- 
ceive the annual interest to accrue thereon, unless de- 
fault shall be made in paying the bills or notes to be 
countersigned as aforesaid, or unless in the opinion of 
the comptroller the bonds and mortgages or stocks so 
pledged shall become an insufficient security for the pay- 
ment of such bills or notes. 

g 11. In case such person or association of persons 
shall fail or refuse to pay such bills or notes on demand, 
in the manner specified in the fourth section of this act, 
the comptroller, after the ten days' notice therein men- 
tioned, may proceed to sell at public auction the public 
stocks so pledged or the bonds and mortgages so assign- 
ed, or any or either of them, and out of the proceeds of 
such sale shall pay and cancel the said bills or notes, 
default in paying which shall have been made as afore- 



220 APPENDIX. 

said ; but nothing in this act contained shall be con- 
sidered as implying any pledge on the part of the state 
for the payment of said bills or notes beyond the proper 
application of the securities pledged to the comptroller 
for their redemption. 

^12. The public debt and bonds and mortgages to 
be deposited with the comptroller by any such person or 
association, shall be held by him exclusively for the re- 
demption of the bills or notes of such person or associa- 
tion put in circulation as money, until the same are paid. 

g 13. The plates, dies and materials to be procured 
by the comptroller, for the printing and making of the 
circulating notes provided for hereby, shall remain in his 
custody and under his direction ; and the expenses ne- 
cessarily incurred in executing the provisions of this act, 
shall be audited and settled by the comptroller, and paid 
out of any moneys in the treasury not otherwise appro- 
priated ; and for the purpose of reimbursing the same, 
the said comptroller is hereby authorized and required 
to charge against and receive from such person or asso- 
ciation applying for such circulating notes, such rate per 
cent thereon as may be sufficient for that purpose, and 
as may be just and reasonable. 

§ 14. It shall not be lawful for the comptroller, or 
other officer, to countersign bills or notes for any person 
or association of persons, to an amount in the aggregate 
exceeding the public debt, or public debt and bonds and 
mortgages at their value, as provided in the second sec- 
tion of this act, deposited with the comptroller by such 
person or association ; and any comptroller or other offi- 
cer who shall violate the provisions of this section shall, 
upon conviction, be adjudged guilty of a misdemeanor, 



APPENDIX. 22i 

and shall be punished by a fine not less than five thou- 
sand dollars, or be imprisoned not less than five years, 
or by both such fine and imprisonment. 

§ 15. Any number of persons may associate to esta- 
blish offices of discount, deposite and circulation, upon 
the terms and conditions, and subject to the liabilities 
prescribed in this act ; but the aggregate amount of the 
capital stock of any such association shall not be less 
than one hundred thousand dollars. 

^16. Such persons, under their hands and seals, shall 
make a certificate which shall specify : 

1. The name assumed to distinguish such association, 
and to be used in its dealings : 

2. The place where the operations of discount and 
deposite of such association are to be carried on. desig- 
nating the particular city, town or village : 

3. The amount of the capital stock of suph associa- 
tion, and the number of shares into which the same 
shall be divided : 

4. The names and places of residence of the share- 
holders, and the number of shares held by each of them 
respectively : 

5. The period at which such association shall com- 
mence and terminate ; which certificate shall be proved 
or acknowledged and recorded in the office of the clerk 
of the county where any office of such association shall 
be established, and a copy thereof filed in the office of 
the secretary of state. 

g 17. The certificate required by the last preceding 
section to be recorded and filed in the offices of the clerk 
of the county and secretary of state as aforesaid, or co- 
pies thereof, duly certified by either of those officers, may 

ir 



222 APPENDIX. 

be used as evidence in all courts and places for and 
against any such association. 

g 18. Such association shall have power to carry on 
the business of banking, by discounting bills, notes and 
other evidences of debt; by receiving deposites ; by buying 
and seUing gold and silver bullion, foreign coins and bills 
of exchange, in the manner specified in their articles of 
association for the purposes authorized by this act ; by 
loaning money on real and personal security ; and by 
exercising such incidental powers as shall be necessary 
to carry on such business ; to choose one of their num- 
ber as president of such association, and to appoint a 
cashier, and such other officers and agents as their busi- 
ness may require, and to remove such president, cashier, 
officers and agents at pleasure, and appoint others in 
their place. 

g 19. The shares of said association shall be deemed 
personal property, and shall be transferable on the books 
of the association in such manner as may be agreed 
on in the articles of association ; and every person be- 
coming a shareholder by such transfer, shall, in propor- 
tion to his shares, succeed to all the rights and Habih- 
ties of prior shareholders : and no change shall be made 
in the articles of association by which the rights, reme- 
dies or security of its existing creditors shall be weaken- 
ed or impaired. Such association shall not be dissolved 
by the death or insanity of any of the shareholders 
therein. 

g 20. It shall be lawful for any association of persons 
organized under this act, by their articles of association, 
to provide for an increase of their capital and of the 



APPENDIX. 223 

number of the associates, from time to time as they may 
think proper. 

§ 21. Contracts made by any such association, and 
all notes and bills by them issued and put in circulation 
as money, shall be signed by the president or vice-presi- 
dent and cashier thereof; and all suits, actions and pro- 
ceedings brought or prosecuted by or on behalf of such 
association, may be brought or prosecuted in the name 
of the president thereof; and no such suit, action or pro- 
ceeding shall abate by reason of the death, resignation 
or removal from office of such president, but may be 
continued and prosecuted according to such rules as the 
courts of law and equity may direct, in the name of his 
successor in office, who shall exercise the powers, enjoy 
the rights, and discharge the duties of his predecessor. 

3 22. All persons having demands against any such 
association, may maintain actions against the president 
thereof; which suits or actions shall not abate by rea- 
son of the death, resignation or removal from office of 
such president, but may be continued and prosecuted to 
judgment against his successor : and all judgments and 
decrees obtained or rendered against such president for 
any debt or liability of such association shall be enforced 
only against the joint property of the association, and 
which property shall be liable to be taken and sold by 
execution under any such judgment or decree. 

§ 23. No sliareholder of any such association shall be 
liable in his individual capacity for any contract, debt or 
engagement of such association, unless the articles of as- 
sociation by him signed shall have declared that the 
shareholder shall be so liable. 

§ 24. It shall be lawful for such association to pur- 



224 APPENDIX. 

chase, hold and convey real estate for the following pur- 
poses : 

1. Such as shall be necessary for its immediate ac- 
commodation in the convenient transaction of its busi- 
ness; or, 

2. Such as shall be mortgaged to it in good faith, by 
vi^ay of security for loans made by, or moneys due to, 
such association ; or, 

3. Such as shall be conveyed to it in satisfaction of 
debts previously contracted in the course of its dealings ; 
or, 

4. Such as it shall purchase at sales under judgments^ 
decrees or mortgages held by such association. 

The said association shall not purchase, hold or con- 
vey real estate in any other case or for any other pur- 
pose ; and all conveyances of such real estate shall be 
made to the president, or such other officer as shall be 
indicated for that purpose in the articles of association ; 
and which president or officer, and his successors, from 
time to time may sell, assign and convey the same, free 
from any claim thereon, against any of the shareholders, 
or any person claiming under them. 

§ 25. Upon the application of creditors or shareholders 
of any such association, whose debts or shares shall 
amount to one thousand dollars, and stating facts, veri- 
fied by affidavit, the chancellor may, in his discretion, 
order a strict examination to be made by one of the mas- 
ters of his court, of all the affairs of such association, for 
the purpose of ascertaining the safety of its investments, 
and the prudence of its management ; and the result of 
every such examination, together with the opinion of 
the master and of the chancellor thereon, shall be pub- 



APPENDIX. 225 

lished in such manner as the chancellor shall direct, 
who shall make such order in respect to the expenses of 
such examination and publication as he may deem pro- 
per. 

3 26, Such association shall, on the first Mondays 
of January and July in every year after having com- 
menced the business of banking as prescribed by this 
act, make out and transmit to the comptroller, in the 
form to be provided by him, a full statement of the af- 
fairs of the association, verified by the oaths of the presi- 
dent or cashier, which statement shall contain, 

1. The amount of the capital stock paid in according 
to the provisions of this act, or secured to be paid : 

2. The value of the real estate of the association ; 
specifying what portion is occupied by the association as 
necessary to the transaction of its business : 

3. The shares of stock held by such association, 
whether absolutely or as collateral security ; specifying 
each kind and description of stock, and the number and 
value of the shares of each : 

4. The amount of debts due to the association ,; spe- 
cifying such as are due from moneyed or other corpora- 
tions or associations; and also specifying the amount 
secured by bond and mortgage or judgment ; and the 
amount which ought to be included in the computation 
of losses : 

5. The amount of debts due by such association ; spe- 
cifying such as are payable on demand, and such as are 
due to moneyed or other corporations or associations : 

6. The amount of claims against the association noi 
acknowledo^ed bv it as debts : 



226 



APPENDIX. 



7. The amount of notes, bills or other evidences of 
debt issued by such association : 

8. The amount of the losses of the association ; spe- 
cifying whether charged on its capital or profits, since its 
last preceding statement, and of its dividends declared 
and made during the same period : 

9. The average amount in each month during the 
preceding six months of the debts due to and from the 
association ; the average amount of specie possessed by 
the same during each month, and the amount of bills 
and notes issued by such association and put in circula- 
tion as money, and outstanding against the association. 
on the first day of each of the preceding six months : 

10. The average amount in each month during the 
preceding six months due to the association, from all the 
shareholders in the association, also the greatest amount 
due to the association in each of the said preceding six 
months, from all the shareholders in such association : 

11. The amount which the capital of the said asso- 
ciation has been increased during the preceding six 
months, if there shall have been any increase of the 
said capital ; and the names of any persons who may 
have become parties to the said articles of association, or 
may have withdrawn therefrom since their last report. 

It shall be the duty of the comptroller to cause the 
statement required to be made by this section, to be pub- 
lished in a newspaper printed in the county where the 
place of business of such association is situated, and in 
the state paper ; the expense of which shall be paid by 
such association. 

§ 27. If such association shall neglect to make out 
and transmit the statement required in the last preceding 



APPENDIX. 227 

section, for one month beyond the period when the same 
is required to be made, or shall violate any of the provi- 
sions of this act, such association may be proceeded 
against and dissolved by the court of chancery, in the 
same manner as any moneyed corporation may be pro- 
ceeded against and dissolved. 

g 28. If any portion of the original capital of any such 
association shall be withdrawn for any purpose whatever 
whilst any debts of the association remain unsatisfied, 
no dividends or profits on the shares of the capital stock 
of the association shall thereafter be made, until the deficit 
of capital shall have been made good, either by subscrip- 
tion of the shareholders, or out of the subsequently ac- 
cruing profits of the association ; and if it shall appear 
that any such dividends have been made, it shall be the 
duty of the chancellor to make the necessary orders and 
decrees for closing the affairs of the association, and dis- 
tributing its property and effects among its creditors and 
shareholders. 

g 29. Such associations shall be liable to pay the 
holder of every bill or note put in circulation as money, 
the payment of which shall have been demanded and 
refused, damages for non-payment thereof, in lieu of in- 
terest, at and after the rate of fourteen per cent per an- 
num, from the time of such refusal until the payment of 
such evidence of debt, and the damages thereon. 

g 30. The president and cashier of every association 
formed pursuant to the provisions of this act, shall at all 
times keep a true and correct list of the names of all the 
shareholders of such association, and shall file a copy of 
such list in the office of the clerk of the county where 
any office of such association may be located, and also 



228 



APPENDIX. 



in the office of the comptroller, on the first Mondays of 
January and July in every year. 

g 31. It shall not be lawful for any association formed 
under the provisions of this act, to make any of its bills 
or notes of a denomination less than one thousand dol- 
lars, to be put in circulation as money, payable at any 
other place than at the office where the business of the 
association is carried on and conducted. 

g 32. The legislature may at any time alter or repeal 
this act. 

§ 33. No association of persons authorized to carry 
on the business of banking under this act, shall at any 
time, for the space of twenty days, have on hand at 
their place of business, less than twelve and a half per 
cent in specie, on the amount of the bills or notes in cir- 
culation as money. 



H 99 78 



xV ^ 

^ ^ 






^^'^ ^^ 




•5^ 






■^ 











C .r, 






^^ ^ %. 



c 



o K 






c'V 



ri'« -> 





•^^.< 











O 



1-^ • 






"-0 











^o V^' r '^ 







014 108 024 6 



